Clinton Cards pushed into administration
Greetings cards retailer Clinton Cards has been forced into administration by its biggest supplier, putting 8,000 jobs at risk.
The group, which is the UK’s biggest specialist cards retailer, operates 628 Clintons and 139 Birthdays stores across the country.
In a statement administrators from restructuring firm Zolfo Cooper said the group had made losses of £130 million since 2004 and said it was likely that a number of stores would need to be closed to make the business viable. The administrators will continue to trade the business as a going concern and said they remained confident it will be attractive to potential buyers.
Peter Saville, joint administrator and partner said: “Despite evaluating ways to restructure its business, Clintons was unfortunately unable to secure adequate support or funding for its restructuring plans. The challenging business environment, and in particular the increased competition for greetings cards and related products, meant that the Group required radical restructuring and administration was the last remaining option available.
Never Miss a Retail Update!“Our first priority is to stabilise the business and assess its financial position. We will continue to trade the business whilst we undertake a full marketing exercise to find buyers for all or parts of the Group so that the best possible outcome can be achieved for stakeholders.”
The administration comes after the group’s banks, Barclays and Royal Bank of Scotland, sold Clintons’ debts of about £35 million to US supplier American Greetings.
In a statement American Greetings said that in addition to the £35 million for which it was now a secured creditor it had a further $25m of unsecured exposure to Clinton Cards, the majority of which is now in default.
American Greetings said it had been in repeated discussions with Clintons since September last year over issues with on-going supplies, but as Clintons had defaulted on numerous payment obligations, shipments had been halted to the company.
However American Greetings’ chief executive Zev Weiss said he hoped there was a future for the UK retail group.
“We would like to see Clinton Cards continue as an important retailer in the speciality channel of distribution in the UK greeting card market,” he said.
“We expect that our recent investment will allow us to work closely with the administrators while they consider Clinton Cards’ restructuring options.
“As secured lender, we are better positioned to assist in identifying and obtaining the best possible solution for Clinton Cards, where we may ultimately participate in the ownership of the business or may continue as a supplier to any buyer of the business.
“We believe that properly managed, and with the appropriate capital structure, Clinton Cards could be both an important and profitable retailer in the specialty channel of distribution over the long term.”
Clintons made a pre-tax loss of £3.7 million in the 26 weeks to 29 January, compared with a profit of £11.7 million in the previous year. Yesterday it reported more poor trading for the 14 weeks since 29 January, with same-store sales falling 3.5%.
