Habitat goes into administration with all stores outside London to close

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Separately, current owner Hilco has struck a deal with Homebase and Argos owner Home Retail Group allowing it to buy the UK rights to the Habitat brand in the UK, the website and three stores in central London for £24.5 million.

Hilco said the stores not included in the deal will trade as normal while the administrator, Fraser Gray of Zolfo Cooper, talks to interested parties.

The private equity firm added that it is in advanced talks to sell the more successful European operation, which consists of 27 stores in France, six in Spain and five in a Germany, to a major European listed business.

Hilco said Habitat posted losses of £88 million over the past three years and a return to profitability in the UK appeared unlikely in the near term as many of the stores were expensive and poorly-located for a furniture retailer.

The collapse of Habitat completes a terrible week for UK retailers, as consumers cut back in the face of the squeeze on household incomes.

Homeform, the owner of Moben kitchens, bathroom chain Dolphin and Sharps bedrooms, said yesterday that it intended to appoint administrators, putting 1,300 jobs at risk, while on Wednesday Comet owner Kesa said it was considering a sale of the electricals retailer after it posted losses of £8.9 million.

Set up by design legend Sir Terence Conran in 1964, Habitat came to epitomise London's young and trendy image during the Sixties with a range of pastel colours and products based on Conran designs.

Private equity group Hilco acquired the debt-laden Habitat in 2009 from the Ikano Group, the company founded by the Kamprad family which owns Ikea. It paid almost nothing for the chain, which was carrying heavy debts, while Ikano also agreed to inject £45 million into the business.