Multiyork Furniture has called in administrators, putting more than 500 jobs at risk.
The furniture maker, which employs 547 people in 50 shops and manufactures upholstered furnishings in Thetford, Norfolk, has struggled amid a tough retail market in which shoppers are shying away from spending on expensive items for their homes.
Multiyork had reportedly been put on the market by its major shareholder, the furnishings tycoon Charles Wade of Wade Furniture Group, which also owns beds maker Feather & Black. The two brands are run as separate entities and the administration does not include the bed maker.
Administrators said that Multiyork has fallen into financial difficulties as it could not meet its financial liabilities as a result of trading losses.
The company had net debt of £1.9m at its 2016 year end, according to the latest accounts filed at Companies House. It recorded a profit of just £479,000 in the 53 weeks to 2 October 2016 after a £714,000 loss a year before.
The company increased sales by 5.4% to £50.4m, partly thanks to an extra week’s trading on the year before.
The brand, which was founded in 1978 and initially operated in the Old Mill site in the village of Mellis, Suffolk, was rescued from receivership by Wade in 1995.
Allan Graham of Duff & Phelps, who was appointed joint administrator on Tuesday, said the business would continue to run for a short period as administrators continue to look for a buyer. “We are asking interested parties to come forward as quickly as possible,” he said.
“Trading conditions for UK retailers continue to be difficult due to a number of factors including economic uncertainty, rising commodity prices, increasing business rates and the fall in value of the pound which has increased the cost of importing raw materials and products,” Graham said.
“This appears to be leading to a sharp fall in consumer confidence and less money being spent on discretionary items.”
The collapse of Multiyork comes after B&Q, John Lewis and online electrical goods specialist AO all pointed to a slowdown in major purchases for the home this week.
Redecorating, renovating and DIY projects are being put on hold as household budgets come under pressure in the run-up to Christmas.
Sofa specialist DFS, which also owns Sofa Workshop and Dwell, last month revealed a 22% plunge in annual profits as it said shoppers were cutting back on big-ticket purchases.
But not all furnishings businesses are suffering. On Wednesday, ScS, one of the UK’s largest retailers of upholstered furniture and floorings, revealed a 2.9% rise in orders at established stores in the 16 weeks to 18 November. Dunelm also flagged a sales recovery last month, easing concerns after the departure of its relatively new chief executive John Browett.
Graham said that the current management of Multiyork would continue to work with administrators to review all orders placed up until 22 November with the intention that all orders would be completed.
“We ask that customers who have placed orders be patient during this time and you will be contacted with further updates in relation to your order shortly,” he said.