It seems today is Black Wednesday for high street retailers, with Maplin announcing it has fallen into administration barely an hour after Toys R Us suffered the same fate. The electricals specialist has been on thin ice since last year, when concerned credit insurers cut their exposure to the retailer, meaning suppliers were unable to insure their debts with Maplin. This resulted in key suppliers refusing to provide stock to the retailer, contributing to a 7 per cent decline in like-for-like sales over the Christmas period.
Over the last month Maplin, which is owned by Rutland Partners, has been in talks with potential buyers and sought to strike a deal with Edinburgh Woollen Mill. With a £15m VAT bill due today the company was in dire need of capital to enable it to continue to trade. However, Maplin’s offer was rejected last night as EWM insisted Rutland Partners maintained a stake in the company.
In its last full year, pre-tax loss grew year-on-year by £9.2m, to £16.1m, although the retailer explained that £10m of this loss was on account of write-downs and they also incurred a £13.7m charge from an interest on loan notes, due to its owners. Its debt was an ongoing concern to its suppliers who worried about Maplin’s future should it fail to generate cash to pay the debt loaded onto it by its owners and today they have been proved right.
Maplin have insisted its issues are predominantly macro, highlighting it does still have a place on the UK high street. Indeed its full year results last year were decent, with revenue growing 0.5 per cent to £236m in line with GlobalData’s forecast growth for the electrical sector. Maplin has continued to invest in smart home, an area of strong growth within the electricals market. Its customer demographic, mainly affluent tech enthusiasts have been quick to adopt Smart Home living, allowing it to become an authority within the market and the retailer highlighted strong sales in this category, growing 161 per cent year-on-year. However, this performance has clearly not been enough to reassure investors, with Maplin unable to secure the capital it required to save it from plunging into administration this morning.
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