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Carpetright is on the brink of collapse as it seeks a buyer, casting doubt over the future of hundreds of jobs at the UK carpet brand.
The British retailer, which has 272 stores and employs 1,852 people in the UK filed a notice of intent on Friday to appoint administrators with the High Court, citing an April software attack that subsequently “impacted its plans to restructure” the business.
“We remain focused on securing external investment to ensure as few customers and colleagues are impacted as possible,” said Kevin Barrett, chief executive of Nestware Holdings, part of the Meditor Group that owns Carpetright.
Hackers were able to infect computers in April at the companies’ offices in Essex, which limited access to Carpetright’s systems and resulted in “some short-term disruption to trade”, as it was unable to operate in-store or online. This in turn affected the company’s bottom line, a spokesperson for the chain said on Friday.
PwC has been lined up to handle the administration but has yet to be formally appointed, according to a person familiar with the matter. The notice is meant to prevent creditors such as suppliers or landlords from claiming any money for 10 days before a formal appointment of administrators is made.
The company said it had “begun promising conversations with interested parties that are moving in the right direction, encouraging us that Carpetright has a viable future”.
The move comes as retailers specialising in other areas of discretionary spending, including furniture, continue to face challenging markets. DFS, the UK’s largest retailer of living room furniture, last month cut its profit expectations by nearly 50 per cent, citing consumer demand in the upholstery sector at a “record low”.
Carpetright started life in 1988, when Philip Harris opened his first shop in east London, after which a rapid expansion led it to list on the London Stock Exchange in 1993. By the end of 2006, the retailer was trading from 246 stores across the country.
But in recent years, the company has had a tricky time as difficult trading conditions and a surfeit of stores have been compounded by competition from Tapi, a private company backed by Harris himself, and managed by his son Martin until earlier this year.
Tapi expanded rapidly, helped by funding from Harris and other wealthy individuals such as DFS founder Graham Kirkham. It often targeted locations where Carpetright stores were already trading.
In 2020, after issuing a series of profit warnings, Carpetright was picked up by former fund manager Talal Shakerchi’s Meditor in a deal that valued the retailer at £15.2mn and was delisted from the London Stock Exchange.
But its struggles continued. Last month, the retailer announced plans to cut more than 25 per cent of its staff and embarked on a plan to drastically reduce costs.
Additional reporting by Laura Onita in London
