Habitat faces job cuts in new home

Owner of Argos and Homebase buys Habitant brand and flagship London stores – but rest of UK chain goes into administration The owner of Argos has bought the Habitat brand in the UK and its three top London stores for £24.5m but the rest of the UK chain has been placed in administration as part of a major restructuring that could result in more than 700 job losses. Home Retail Group chief executive Terry Duddy said it had bought the rights to the furniture and accessories brand and the Habitat website but just three of its 33 stores. He said only 150 of its 900 staff, including 50 from its 194-strong head office including the design team, would move over to work for the group, which also owns Homebase. Restructuring firm Zolfo Cooper has been appointed to find buyers for the 30 unwanted stores which will continue to trade as usual. The company said all existing orders and all customer deposits were fully protected. Duddy promised to preserve the integrity of the retailer which was started in the 1960s by design guru Sir Terence Conran as an antidote to the austere furniture aesthetic of postwar Britain. “There is no value in us doing anything to undermine this brand; it is about preserving its integrity,” he said. The Habitat brand with its “style-led credentials” and “strong heritage” was, he said, a significant addition to the group’s portfolio of brands, which include Schreiber, Hygena, Alba and Bush. Duddy said he did not know whether the deal had the blessing of Conran but said the design team was in contact with the founder recently and those conversations had been positive. Habitat has struggled financially for many years: the shops were a breath of fresh air when they arrived on the high street, but its clever designs were mimicked by cheaper rivals and, by the late 1980s, it was in financial difficulties. It was owned by Sweden’s wealthy Kamprad family, whose patriarch Ingvar founded Ikea, for nearly 20 years, but even their expertise could not revive its fortunes and they paid restructuring firm Hilco a multimillion pound dowry to take the loss-making business off their hands in December 2009. In the most recent set of accounts filed at Companies House, Habitat made a loss of £18.7m on sales of £74.3m in the year to March 2009. Hilco said trading conditions remained challenging for retailers of big-ticket items such as furniture. “Significant progress has been made reducing losses and refining the product mix following the installation of a new management team,” it said. “However, a return to profitability for the business in the UK appears unlikely in the near term as many of the stores are expensive and poorly located for a furniture retailer.” Home Retail is buying three London stores which are on the capital’s prime furniture shopping streets: Kings Road, Tottenham Court Road and Finchley Road. It plans to open about 25 Habitat departments in Homebase stores and has not ruled out selling the brand through the Argos catalogue. The company said it expected Habitat to deliver a small loss in its first year but then move into profit. Hilco said it was in advanced talks with a major European listed business to sell Habitat’s profitable European arm, which has 27 stores across France, Spain and Germany. Home Retail Retail industry London Zoe Wood guardian.co.uk

Posted by on June 24, 2011. Filed under News, Politics, World News. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.