British DIY-retailer Focus went into administration yesterday, putting nearly 4000 jobs at risk. The chain currently has 178 stores throughout the UK, and analysts expect that they will work normally until administrators are officially appointed, probably at the end of next week. Last year, Focus made made a pre-tax loss of 24 million euro.
Reportedly owners Cerberus, who bought Focus for just £1 (€1.12) in 2007, have asked Ernst&Young to handle the administration process. Despite Cerberus’s investments of probably around 220 million euro, Focus’s debts have risen from 190 million to 260 million euro in those four years. Focus suffers mainly from the recession in the economy and falling consumer confidence, but also from tough competition from Wickes – the brand that, ironically, Focus owned until 2005.
A statement from Focus said yesterday: “Following notification of an event of default under the senior credit facility, and a realisation that there were no alternatives that could be explored any further, Focus directors have come to the conclusion that to protect the interests of creditors they have no choice but to seek protection through filing a notice of intention to appoint administrators.”
Several analysts wonder if it is private equity group Cerberus who caused Focus to fail, as their short time pressure might have endangered Focus’s long term vision. Several DIY chains in the Benelux, like Brico and Praxis, are also private equity-owned.
