MFI,Woolworths who is next ?

[tedebear]

I was led to believe Woolies went bust as it has a huge borrowing facility and the banks called it in. It wasnt necessarily the fact sales were down. A number of profitable smaller businesses have collapsed due to similar reasons i.e. cash flow. I listened to Radio 5 about a profitable plumbing company in south London who folded because the bank stopped their credit.

If the banks started up their small business credit lines again things might be a bit better.

I disagree - profitable business do not need lines of credit. Businesses might need loans to get going, but if you need debt to maintain a business which gean in 1909 then you've got a business in trouble. Woolworths downfall was its inability to get cheap stock from its stock rooms and on to its shelves to compete with Tescos who have absolutely no problem with stock distribution.

 

[Lord Bracknell]

The correct answer is Dixons & Currys.

They sell stuff that is available cheaper (and more conveniently) on the internet, without offering any real added value such as outstanding customer service.

Besides which, almost everyone who wants electronic/electrical stuff has already bought it - and won't be renewing it until the economy picks up.

 

[Lord Bracknell]

Here's a big list of companies in trouble:-

http://www.guardian.co.uk/business/2008/nov/30/retail-christmas-downturn-investments-business

Matalan
Currys
PC World
FADS
Focus DIY
Land of Leather
Jessops
Body Shop
Clinique
Fat Face
Jimmy Choo
New Look
House of Fraser
Debenhams
Whistles
Mosaic
Zavvi
Wyevale Garden Centres
Burberry

 

[Herr Tubthumper]

I disagree - profitable business do not need lines of credit. Businesses might need loans to get going, but if you need debt to maintain a business which gean in 1909 then you've got a business in trouble. Woolworths downfall was its inability to get cheap stock from its stock rooms and on to its shelves to compete with Tescos who have absolutely no problem with stock distribution.

Totally disagree. There is a slight difference between debt and cash flow. Cash flow and borrowing is and probably always will be a mainstay of business.

BTW Tesco has an huge, enormous, credit facility..and their cash flow debt as of last year was 6182 million!
Summary financial statement: Group cash flow statement - Tesco Annual Review 2008

 

[coventrygull]

What about DFS?

 

[Herr Tubthumper]

I disagree - profitable business do not need lines of credit. Businesses might need loans to get going, but if you need debt to maintain a business which gean in 1909 then you've got a business in trouble. Woolworths downfall was its inability to get cheap stock from its stock rooms and on to its shelves to compete with Tescos who have absolutely no problem with stock distribution.

P.S. do you work in the financial industry?

 

[coventrygull]

Also would of thought the travel Industry will take a battering

 

[Herr Tubthumper]

Here's a big list of companies in trouble:-

http://www.guardian.co.uk/business/2008/nov/30/retail-christmas-downturn-investments-business

Matalan
Currys
PC World
FADS
Focus DIY
Land of Leather
Jessops
Body Shop
Clinique
Fat Face
Jimmy Choo
New Look
House of Fraser
Debenhams
Whistles
Mosaic
Zavvi
Wyevale Garden Centres
Burberry

Job losses aside, I cannot say I'd be bothered if any of these went to the wall.

I'm surprised by Burberry though. Most of their clothes are purchased with benefits which wont be hit by the current crisis.

 

[coventrygull]

Job losses aside, I cannot say I'd be bothered if any of these went to the wall.

I'm surprised by Burberry though. Most of their clothes are purchased with benefits which wont be hit by the current crisis.

Would be sad tp see the Body Shop go. With its old connection with Brighton

 

[Herr Tubthumper]

Would be sad tp see the Body Shop go. With its old connection with Brighton

Fair point but they were bought by someone, L'Oriel I think, a while back.

And at least Jimmy Choo were a bit creative.

 

[Gully]

I would add to the list that LB produced the likes of Ottakers, Waterstones and Virgin (records)...you can buy pretty much everything they sell far cheaper online!

I am sure most people will remember the early 90's when pretty much every town had empty shops, only to be opened up at this time of year as Christmas shops...selling cheap cards, wrapping paper and general rubbish...I am guessing that the big worry is that we will go back to those times, when most British town centres resembled Teville Gate on a good day!

 

[tedebear]

Totally disagree. There is a slight difference between debt and cash flow. Cash flow and borrowing is and probably always will be a mainstay of business.

BTW Tesco has an huge, enormous, credit facility..and their cash flow debt as of last year was 6182 million!
Summary financial statement: Group cash flow statement - Tesco Annual Review 2008

Lines of credit! Smoothing cash flow is different, Woolies couldn't service its debt. Bank withdraws it, bingo game is up.

Tesco is a very very different beast, cash is there to service the debt, not to mention turnover.

Just realized my post above was a bit naf - bit hard to make sense when I'm being demanded to play scalextric with a 3 year old...(who will probably beat me)

 

[Herr Tubthumper]

The high streets been dying since the rise of internet shopping. I for one only go to the high street for clothes and have been for years now - but even clothes people buy online.

This is good point. There are a lot of empty retail premises in Hove. Woolworths will soon join the list. I wonder where all this will end.

I'm trying to put money into local shops as much as possible though. I admit to shopping in Tescos but I buy local produce and make sure other things like newspapers and mags are bought at my local newsagents.

 

[Beach Hut]

Zavvi has definitely been rumoured to be in trouble - partly because they owe £100m to EUK, which is part of Woolworths... and that debt is likely to be called in.

Zavvi is in administration now so Branson made the right decision to sell.

Don't forget The Pier went bust as well.

 

[Herr Tubthumper]

profitable business do not need lines of credit.

for cash flow they do.

 

[Gully]

Another company that is constantly at risk of going under is Weatherspoons, most of the time their cash flow only allows them to trade for a couple of days before becoming bankrupt, but that is the business model that they work to. The way the company survives, and is able to trade successfully, is because they buy all their stock just a few days before it reaches the end of its shelf life and at a knock down price...hence they are able to undercut most of their competition. Another approach of the company was to put their bars in buildings that had another use that was unrelated to the licenced trade, hence you will find them in buildings that used to be things like banks or cinemas. I am sure that this allowed them to pick up properties for peanuts, thus reducing set up costs and pretty much ensuring a busy town/city centre location.

 

[Cheshire Cat]

Any/all of the sofa warehouses.

 

[BensGrandad]

Another company that is constantly at risk of going under is Weatherspoons, most of the time their cash flow only allows them to trade for a couple of days before becoming bankrupt, but that is the business model that they work to. The way the company survives, and is able to trade successfully, is because they buy all their stock just a few days before it reaches the end of its shelf life and at a knock down price...hence they are able to undercut most of their competition. Another approach of the company was to put their bars in buildings that had another use that was unrelated to the licenced trade, hence you will find them in buildings that used to be things like banks or cinemas. I am sure that this allowed them to pick up properties for peanuts, thus reducing set up costs and pretty much ensuring a busy town/city centre location.

This is the biggest load of twaddle I have ever read about this myth of Weatherspoons buying short dated stock, written by somebody who does not know 1 iota of what they are talking about.

I helped Tim Martin when he had his very first bar, as my company were his stocktakers which was Martins in North London which he owned in partnership with an old uni pal Andrew Marler. They split up Tim kept Martins and Andrew Marler bought a bar at Highgate, Marlers. The first of the Weatherspoons concept was pub in Stoke Newington, the name alludes me at the moment. Being a lawyer Tim realised that the majority of pub owners and councils refused licences on the grounds of there not being a need which was an illegal objection so he exploited it. He then set about setting up the 'superpubs' using old stores like Courts,Banks etc. When they aquire a premises they set aside £1m for set up and developement and tell the shareholders that they will not get a return on their investment for at leaast 10 years. In a lot of cases like Littlehampton the council give him a rent free long term usually 99 years lease on large premises if they want one of his pubs in their town.

As regards stock they DO NOT buy short dated stock but they do buy in bulk. I was in his office 1 day when a Scweppes rep came in and Tim told him I will pay you 35p a dozen for mixers either come in and we will make arrangements for the delivery or shut the door as you leave. The rep agreed and he arranged for 24 cases of tonic ( 1/2 pallet) to be delivered to every pub that week followed by 24 cases of each mixer and fruit juice in successive weeks. He did the same with Diamond White Cider on one promotion , he had 100 doz delivered to every unit for which he paid 25p a bottle and did the promotion at £1 a bottle. Using this philosophy on purchasing everybody is a winner because the production and distribution costs are reduced whether it be beer , minerals or whatever.

My own personal view, and it is not backed by anything other than a hunch, that when he owned the company, unlike now where he only owns 40% of the shares, he was going to build the company up and either sell it off to M & B or similar or he was going for the big bankruptcy to lose his debts like Techenguiz has done with Yates.

.

 

[Leekbrookgull]

Lord B,alittle surprised to se you name Matalan.

 

[Leekbrookgull]

Still think WH Smith,s will find it hard going.