Empire Direct falls into administration following loss of credit insurance

Empire Direct falls into administration following loss of credit insurance
January 20 2009
The Financial Times

Electronics Stores UK

Empire Direct falls into administration following loss of credit insurance

Empire Direct, an electricals retailer, fell into administration on Monday after a poor Christmas for most stores selling televisions and washing machines was aggravated by the loss of credit insurance.

KPMG, administrator to the company, which employed 350 people, said the "business really suffered when credit insurers withdrew cover in October". Credit insurers insure suppliers against the risk of the retailer defaulting on debt.

The Leeds-based retailer was one of the few specialist electrical chains to have survived the competition from Kesa Electricals and DSG International, the owners of Comet and Currys, both of which have seen their own sales come under pressure as consumers refrain from buying "big ticket" electrical and electronic products.

With turnover of £152m, the company had bank overdrafts of £10.9m at its year end in March last year.

In the accounts, directors flagged "the ongoing availability of overdraft facilities" as a potential risk.

Empire Direct, which is 25 years old and was run and part-owned by Madan Showan, had 14 stores which have now been closed, as well as a large website.

KMPG said it was trying to contact customers who had paid for goods but not received them.