Black day for the high street as stores close and clouds hang over restaurant chain

Prezzo in Blackpool
Prezzo in Blackpool

Thousands of high street jobs are under threat after two major names went into administration and rumours circulate about a restaurant chain.

Staff at Maplin and the Prezzo Italian restaurant chain are in limbo as tough trading conditions put pressure on big brands.

Prezzo has restaurant in Victoria Street, Blackpool, St Annes Road West, St Annes and the Teanlowe Centre Poulton.

The owner of Prezzo, TPG Capital of the USA, is reported to be set to shut 100 of its 300 restaurants as it considers a Company Voluntary Administration.

Electronics company Maplin, which has a shop at the Blackpool Retail Park off Squires Gate Lane, became the second big retailer on the same day to fall into administration, putting 2,500 jobs at risk.

More than 3,200 staff face uncertainty at Toys R Us.

Maplin has 217 stores in the UK, and PwC is still attempting to find a buyer for the group. Graham Harris, the company’s chief executive, said: “I can confirm this morning that it has not been possible to secure a solvent sale of the business and as a result we now have no alternative but to enter into an administration process.

“During this Maplin will continue to trade and remains open for business.”

He added that the retailer has been struggling to mitigate the impact of the pound’s devaluation post the Brexit vote, a weak consumer environment and the withdrawal of credit insurance. This necessitated an intensive search for new capital that in current market conditions has proved impossible to raise.

“These macro factors have been the principal challenge, not the Maplin brand or its market differentiation,” Mr Harris added.

Edinburgh Woollen Mill, run by retail billionaire Philip Day, had been touted as a potential rescuer for Maplin.

But talks are thought to have broken down.

High street chains and restaurants have been hit hard by falling consumer spending, soaring inflation and competition from online rivals. The fall in the pound after the Brexit vote has also been blamed for rising costs.

Paul Barber, North West chair of the insolvency and restructuring trade body R3 and a partner at Begbies Traynor, says: “While each of these companies had their own specific problems, these administrations reflect the wider difficulties facing the retail sector.

"Traditional retailers are under pressure from a host of different factors – a slowdown in consumer spending, the rising cost of imports due to the low pound, pensions deficits and tough competition from both online sales and new entrants in the market.

“Consumer spending habits are changing too. Shoppers are choosing to spend more on online promotions or on ‘experiences’ such as eating out, and stores are having to create a more exciting retail environment to attract them. The larger warehouse-style stores that were popular in the 1990s not only have higher overheads but struggle to create the vibrant in-store experience offered by some of their more dynamic competitors.

“R3 figures show that 33% of retail businesses in the North West are considered at higher than average risk of failure, equivalent to over 7,000 businesses in the region. While retail is by no means the highest risk sector, we may yet see more insolvencies in the months ahead.”

The administrators of both Maplin and Toys R US have said they will accept gift cards, although they are not legally obliged to do so. Paul Barber added: “Customers with gift cards from either of these stores should check with store staff whether they can still redeem them, and sooner rather than later, if possible.”