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Woolies shares are suspended and MFI fights for survival
Simon English26 Nov 2008
The future of Woolworths was thrown into greater doubt today when its shares were suspended on the stock market.
With 30,000 staff fearing for their jobs and rumours of insolvency spreading across the City, the high street retailer confirmed week-old speculation that it was in talks about a sale of the business.
It came as furniture chain MFI, which operates more than 100 stores employing 1,500 staff, was also battling for survival in a bitter row over unpaid rents.
Woolworths is in desperate need of a cash injection and is said to be struggling to pay wages. The shares were suspended at 1.2p - a move aimed at giving it breathing space while it holds talks with banks and bidders.
The 800-strong retail store business for which Woolies is best known is in its 100th year. It could be sold to Hilco, a rescue specialist which would pay a nominal £1 for the business and take on chunks of a £385 million debt.
Meanwhile, the BBC has agreed to pay £100 million to buy out the 40 per cent of 2entertain that it does not already own. 2entertain is a joint venture with Woolworths which publishes DVDs including Doctor Who and Blue Planet.
The BBC deal would effectively see TV licence payers bailing out Woolworths. However, if Hilco refuses to agree to take on enough of the debts to keep the banks happy, then both deals will fail.
This would almost certainly push the company into bankruptcy. Woolworths has been a stalwart of the high street since 1909 when the first store opened in Liverpool. It remains the biggest seller of pick and mix sweets but has been hit by competition from supermarkets, WH Smith and the internet.
Although the stores remain open for business, critics say they lack focus and at their worst resemble jumble sales.
If the Hilco takeover goes through, brutal job losses are likely to follow. Woolworths today said of the possible sales: "While discussions in relation to such sales are being pursued with vigour, terms have not yet been agreed. Both sales are subject, among other things, to the approval of the group's lending banks."
Meanwhile if MFI cannot reach a deal with its landlords, then an administrator will be appointed to wind up the business. Its website was offering discounts of up to 70 per cent on furniture this morning.
All retailers have been hit hard by the recession. Furniture and electrical stores have suffered the most, as consumers delay or abandon plans to make "big ticket" purchases. Retail analysts in the City say the Bank of England was too slow to cut interest rates and must take some of the blame for the carnage on the high street.
Reader views (17)
Since my earlier post its been announced that they wont be trusted to sell lottery tickets!
Perhaps they should orgaise their own lottery with the shops as prizes!!
- Melvyn Windebank, Canvey Island, Essex, 27/11/2008 14:32
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Maybe they will change their name to:
Woolworthless
and MFI can reorganise by calling itself the IMF
- Adam, Harrow, UK, 27/11/2008 08:18
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No, JC, we didn't all buy into it. Many could see the greed and arrogance, and denial of reality quite clearly, and resisted. Stupid, blind deregulation. Stupid borrowing. Property prices rising forever. The propaganda in all the media all the time. Rents and other costs going up to "match". Perfectly decent busineses, industries and employers destroyed by the concentration on property and rents (which don't seem to be falling as property prices are), in a text book imitation of the cause of the Japanese crash in the '90s. Massive inflation conveniently not technically counted as such, hugely enriching the property owners at the expense of the poor, as, all the time, the government was praised for reducing the poverty gap. Those paid to know better tried to force it on us in every way possible, and punished those of us who refused to join in. Belief being, of course, everything. Now we will mostly suffer yet more as the government bails out the venal and stupid then ups taxes and cuts services and benefits, for decades, to pay for it. My question is: the next time there's a ruling idiocity, how may we blow the whistle so it will be heard?
- Jenny, Twickenham, England, 27/11/2008 00:42
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The High Streets will never be the same again without a Woolworths Store, if only they were given a chance
there must be some value still in this business, their Entertainment UK & 2 Entertain parts of the business are worth quite a lot of money also if Woolworths were to reduce some of their stores and rake in some money for them plus their stock must also be worth money then finally they would live to fight another day.
I had faith in Stephen Johnson I thought he could make this store great again just like Wilkinsons are today.
I did read recently that Wilkinsons over the next few years were looking to open more stores maybe they could have joint forces and give Tesco a run for their money.
Why don't Woolworth's sell more food items, in the past Tesco's would not have sold items similar to Woolworth's I noticed the other day Tesco's are now trying to out do Argos, will they be next to go!
- Lee, Ryde, 26/11/2008 23:26
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Woolworths should never have stopped selling the cakes and biscuits it was once famous for!
If I was in charge I would go back to the roots of Woolworths in the 3d and 6d (5 cent and 10 cent) format and copy the sucess pound stores have had along with the example set by primark.
Woolworths now only sells items that you only need to buy when you need to buy them!
otherwise there is nothing apart from some sweets and lottery tickets worth buying.
Perhaps Boris Johnson and Andrew Gilligan can form a partnership and buy Woolworths as they like things from the past that are past their sell-buy date?
(ps As I was about to send this comment I noticed an ad for Woolworths Discount on my screen!)
(PPS Hear about the man who said to the woolworths assistant "Keep the change" and he was then handed the deeds for that shop.)
- Melvyn Windebank, Canvey Island, Essex, 26/11/2008 21:54
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favell knew this was coming but put up smoke screen, i worked for mfi for 10 years, retail is better without them, liars and cheats,i had to lie to customers to get orders to reach targets, regards ex manager.
- Mark, wales, 26/11/2008 21:25
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HELLO LONDON,
HAS ANYONE SEEN "SID" ?.
- John L., Scarborough N.YKS. U.K., 26/11/2008 20:15
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I am sure I speak for many people when I say that Woolworth's represented our childhood. And, even recently, I have always found useful and sometimes very good-looking things in there, at great prices.
I usually re-wrapped them and told people they were from John Lewis!
How I shall miss Woolie's!
Any chance of saving ONE store that we could all go to for old time's sake?
- Sidney Marks, London, England., 26/11/2008 19:24
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any one notice, that nobody mentions "free market economy" - anymore and what the concept actually means!
It is tough, especially for those people employed, many of whom on very low wages.
But remember we bought into this particular brand of smoke and mirrors/emperor's new clothes and this is the consequence.
- Jc, se1, 26/11/2008 17:48
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The Labour Government are right to make ultimatums to the banks about their selfish attitude to the UK companies and the British public they are supposed to help. They will all be nationalised shortly and they will have deserved it.
- Keith Price, Luton, England, 26/11/2008 17:14
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The High St will be poorer if they go. Maybe the government should step in like they have done with the banks.
- Dave Smith, Croydon, 26/11/2008 17:04
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A great shame about Woolworths. They sell quite a few useful and/or entertaining things but are being squeezed on many sides. If they could have offered as many lines as Argos, they could have weathered the storm better.
- John, London, 26/11/2008 15:27
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Woolworths should have gone bust years ago. Their stores are cluttered, they have no "theme" and their customer service is dreadful, with surly, sulky teenagers trying their best to be unhelpful. Lots of their square footage is dedicated to ultra-low margin items such as sweets, so it is no surprise they are failing.
- Neil, london uk, Airstrip ONE ., 26/11/2008 13:46
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Never mind bashing the corporate side of these issues, there is a human cost. Thousands of people whose lives depend on MFI and Woolworths are fearful for their jobs.
The Government and the Banks have a lot to answer for.
- Mark, Bournemouth England, 26/11/2008 12:29
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Woolworths are so entrenched in the high street, they were never going to be able to compete once the likes of Tesco and ASDA moved into houseware items in the big way they have. They tried to hit back with their "Big W" brand, by including food lines in stores, but ultimately have been doomed by local authorities with a desire to kill off town centres in preference to out-of-town soul-less deserts.
- Md, London, UK, 26/11/2008 11:54
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>> The shares were suspended at 1.2p - a move aimed at giving it breathing space while it holds talks with banks and bidders
that's about 1.1p over valued then!
- Adam, Harrow, UK, 26/11/2008 11:49
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Beware of MFI - stay well clear - I'm in dispute with them and issued court proceedings - they've already told the court MFI Retail Ltd is in administration - no customer service - just avoidance of its liabilities by "restructuring" - the old saying "caveat emptor" - let the buyer beware - springs to mind.
- David, southampton, 26/11/2008 10:43
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