Woolworths desperate for buyer amid retail turmoil

Just a year shy of celebrating its centenary, retailer Woolworths Group PLC was on the verge of collapse Thursday as financial administrators appointed to the company raced to find a buyer for its 800-strong chain of outmoded stores.

The potential demise of the purveyor of an eclectic range of goods from sweets and cheese graters to magnifying glasses and DVDs marks the biggest retail casualty of a severe slump in consumer spending and — along with the similar collapse of furniture chain MFI — puts almost 30,000 jobs at risk.

"The eye of the storm has moved on from the banks to the retailers," said Keith Bowman, an equity analyst at Hargreaves Lansdown Stockbrokers. "

Woolworths, which opened its first store in Liverpool, northern England, in 1909, said it had appointed Deloitte to take control of Woolworths PLC, its retail arm comprising its stores and distribution centers that employ some 25,000 people.

Deloitte administrators are looking for buyers — either for the entire business or its parts — and are also now in charge of Entertainment UK Ltd., its wholesale distributor of entertainment products after last-ditch attempts at a fire sale of both divisions failed.

MFI, which employs around 1,500 people in 100 stores across the country, appointed MCR as administrators, citing the downturn in the property market for killing demand for its "big ticket" goods.

The scale of the spending slump on the retail sector was further highlighted by weak earnings reports Thursday from home improvement retailer Kingfisher PLC and DSG International PLC, Britain's largest consumer electronics retailer.

John Gorle, national officer of the shopworkers' union Usdaw, said the union was seeking urgent talks with administrators to gain guarantees about workers' pay and jobs.

Dan Butters, reorganization services partner at Deloitte, said the administrators had received "expressions of interest from a number of parties for both the retail and wholesale businesses" in the past 24 hours.

"We are working hard to ensure that any sale of the business, in whole or part, will preserve jobs," he said, adding that all stores would remain open for now.

Placing a company into administration is similar to filing for bankruptcy protection. Administrators are appointed to salvage as much of the company as possible for the benefit of its creditors, a process which can involve trying to keep the business as a going concern or breaking it up and selling it off.

MCR joint administrator Philip Duffy was less positive about its task with MFI, saying that a decision had not yet been made "as to an appropriate exit route and the future of the company" and that sales of some or all stores were under review.

Retailers across the board have reported much tougher conditions in recent months amid mounting unemployment and falling house prices, while the slide in the value of the British pound has raised the cost of buying goods from overseas.

Leading department stores Marks & Spencer PLC, Debenhams and Selfridges have all resorted to unusual pre-Christmas discounting in recent days to pull in shoppers.

Woolworths' current debt-laden predicament is a far cry from the clamor that greeted the first British store when it opened under the FW Woolworths brand — a subsidiary of its U.S. parent.

Lines formed for hours before the doors opened and eager customers all but stripped the counters bare before the end of the day — with everything from glassware to tin toys flying off the shelves.

At the height of the company's success, a new store was opening every 17 days. But in recent years the company has struggled to remain relevant as supermarket chains expanded aggressively into its traditional business, selling everything from bed linen to toys and underwear.

Its shares were suspended from trading on Wednesday at barely more than a penny each.

Shoppers at the company's store in Camden, north London, had mixed feelings about the potential disappearance of the chain.

"I always saw Woolworth's as an ancient relic of my grandmother's era until I had to furnish my first flat on the cheap," said Maisey Wilson, 26, an artist. "Forty p (pence) plates and glasses saved my life that first year."

Marta George, 57, a nanny, epitomized Woolworths' increasing status as good enough for staples, but not for anything special, as she bought bed linen.

"I'm not going to put Woolworth's linens on my bed, but they'll suit my daughter's family just fine when they visit for a week on holiday," she said.

Two parts of the Woolworths group — its 2Entertain DVD publishing joint venture with BBC Worldwide and its Bertram book wholesale business — are not in administration. The company said it was in ongoing discussions to sell its 40 percent stake in 2Entertain to BBC Worldwide.

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Associated Press Writer Elle Moxley in London contributed to this report.

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