Two of Britain’s major retailers have lurched into administration putting about 5,500 jobs at risk.
The nationwide retailer Toys R Us was first to announce, having been in trouble for months. It failed to find a buyer for the business, which has about 105 stores in the UK and some 3,000 jobs are at risk.
Just an hour later, electronics chain Maplin also called in the administrators, putting 2,500 jobs in jeopardy.
Analysts say both traditional “bricks-and-mortar” chains have been struggling to find traction with shoppers now turning increasingly to online offerings.
The writing has been on the wall for some months for Toys R Us. It managed to strike a £9.8m deal with the pension watchdog before Christmas that bought it some more time but that now appears to have run out.
It failed to find a buyer and was forced into administration when it was due to pay a £15m VAT bill.
Moorfields Advisory has been appointed administrators to Toys R Us. It says all stores will continue trading until further notice.
Stock will be sold off using clearance discounts and other special promotions and customers should redeem gift cards and vouchers as soon as possible.
“We will make every effort to secure a buyer for all or part of the business,” said joint administrator Simon Thomas.
“The newer, smaller, more interactive stores in the portfolio have been outperforming the older warehouse-style stores that were opened in the 1980’s and 1990’s.”
It’s unclear how many stores or jobs, if any, will be saved.
Maplin has also been fighting to stay afloat for weeks. Graham Harris, chief executive of Maplin, said: “I can confirm this morning that it has not been possible to secure a solvent sale of the business and as a result we now have no alternative but to enter into an administration process. During this process Maplin will continue to trade and remains open for business.”
He added that a combination of sterling devaluation post Brexit, a weak consumer environment and the withdrawal of credit insurance contributed to the company’s failure.
Maplin was founded in 1972 and has more than 200 stores and 2,500 staff.
Thousands of UK retailers are believed to be in trouble, according to analysts as the costs of rents and rising business rates bite into the bottom line.
And it’s not just retail that is struggling. Restaurant chain Prezzo is reported to be closing 100 of its 300 eateries, while celebrity chef Jamie Oliver has been forced to close his flagship Barbecoa steakhouse in London and dozens of his Jamie’s Italian restaurants.
Neil Wilson, senior market analyst at ETX Capital, told the BBC Toys R Us and Maplin won’t be the last names to hit tough times.
“Ultimately this is a necessary shakeout of some pretty out-dated retailers, which though terrible for those affected by job losses, is likely to mean a leaner, fitter retail market and a more productive use of capital,” he added.