Comet enters administration, 6000 jobs at risk

More than six thousand jobs are under threat as the high street braces itself for another high profile casualty.

 

Comet, the electricals chain, is to go into administration next week after struggling to stock up for Christmas.

 

Staff were informed of plans on Thursday morning and restructuring specialist Deloitte has been lined up to handle the administration.

 

The company said it was “urgently working” on plans to secure its future and it was expected that Deloitte would seek a buyer.

 

Sky News reported last month how OpCapita, which has owned Comet for just 10 months, had received a number of unsolicited approaches for Comet and had been exploring the option of a sale.

 

It paid just £2 to take Comet off Kesa Electricals’ hands as it struggled to compete against strong supermarket and online competition, the consumer spending squeeze and high rents.

 

Such troubles also accounted for the fall from grace of the likes of Clinton Cards and Game.

 

According to the Local Data Company and PwC an average of 32 chain stores a day closed in July and August, underlining the challenges facing the wider high street.

 

News of Comet’s cash problems come only weeks after JJB Sports called in administrators, resulting in 2,000 job losses.

 

But Comet’s collapse is likely to become embroiled in controversy as OpCapita received a £50m cash dowry from Kesa, now known as Darty, to take it over with Darty also retaining Comet’s pension liabilities.

 

OpCapita had also negotiated a £130m dowry before it bought furniture chain MFI in 2006, which later collapsed.

 

The collapse may be a double-edged sword for consumers.

 

While it raises the prospect of a pre-Christmas rush for discounted stock such as TVs and PCs at its 235 stores – if the administrator chooses to wind down supplies and raise cash for creditors – there will be concerns over existing orders.

 

Comet said today it would honour those and people could still redeem gift cards and vouchers as it would be “business as usual until further notice”.

 

Comet’s customer care team is handling any inquiries on 0844 8009595.

 

Shares of Comet’s rivals rose on news of the  administration, with PC World and Currys parent Dixons Retail leaping by 15%.