Ethel Austin: Jobs axed at head office

Apr 17 2008

ADMINISTRATORS at collapsed Merseyside-based retail chain Ethel Austin yesterday made 181 head office staff redundant and announced the closure of 33 of the group’s stores.

The bad news was conveyed to around 500 staff at the firm’s Knowsley base at a meeting yesterday afternoon.

Many of the affected staff work in the company’s purchasing department. The stores selected for closure are those that are trading at a loss, and another 300 staff will lose their jobs there.

Administrator Phil Duffy, a partner at insolvency firm Menzies Corporate Restructuring, said the redundancies and closures were necessary in order to keep the business going for the time being.

Mr Duffy plans to advertise the business for sale in Friday’s newspapers, a move he expected would generate significant interest from possible buyers. “We have already been contacted by about eight interested parties. I am hopeful we can sell this business as a going concern,” said Mr Duffy.

Among the staff being made redundant is the senior manage- ment team, including chief execu- tive Simon Cooper. But finance director Paul McDonald remains to assist with the handover.

The group will be left with 268 stores following the closures announced yesterday. They should also result in about 300 shop staff around the country losing jobs.

Ethel Austin was placed into administration on Tuesday. Poor high street trading was blamed for the move. The company has recently been acquired by retail entrepreneur Elaine McPherson, who previously owned clothes stores MK 1. It had previously been owned by the private equity arm of Dutch banking group ABN AMRO and Credit Suisse. The collapse represents a huge reversal in the fortunes of the business, which four years ago had embarked on a massive expansion programme that was meant to see it double in size to around 500 stores.

A source close to management said: “It was a bad day. There were a lot of unhappy people. There was a lot of upset at head office.”

National Officer for the shop workers’ union Usdaw, John Gorle, said: “The announce- ment that Ethel Austin had gone into administration wasn’t a complete surprise.

“We have been aware for some time about the financial difficulties facing the business.

“However, we had been hopeful that refinancing of debts would save it from administration.

“This news is a tragedy for all those involved.

“We will be working with the administrators in an attempt to secure as many jobs of our members as possible.”

A spokesman for Knowsley Borough Council said the local authority was seeking a meeting with the administrators as soon as is practical.

The spokesman said: “We will do what we can to minimise job losses.”

Ethel Austin is one of the area’s best-known businesses. It was founded by Ethel Austin who sold balls of wool from her Anfield home in 1934. It opened its first shop in Walton two years later.

As recently as two weeks ago, Mr Cooper had been offering assurances that it was “business as usual”, despite newspaper reports that the company was in talks with its bankers about its financial position.