Budget DIY's trading position precarious, say administrators

Administrators for retailer Budget DIY, which employs 187 people across six stores in Northern Ireland, have described the company…

Administrators for retailer Budget DIY, which employs 187 people across six stores in Northern Ireland, have described the company's trading position as precarious, with "substantial creditors and little cash".

PricewaterhouseCoopers were appointed as administrators last Friday in an attempt to salvage the business, but yesterday warned that the immediate future for the company would be determined by revenues generated by the stores on a day-to-day basis.

"We are resolving matters on the ground to ensure that staff get paid what they are due," said joint administrator Garth Carlow. "Things are very difficult and funding is extremely limited, but I believe the situation will become clearer in the next 24 hours."

Budget DIY was founded in 1983 and was locally owned until March of this year when competition from big brand DIY retailers forced its sale to Manchester-based Hilco group.

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At the time it had a turnover of £20 million, but was on the brink of insolvency with creditors owed more than £3 million.

Hilco set about restructuring the company, selling a loss- making store in Cookstown and closing another store in Belfast which had accrued debts of £1.2 million. In May it made an informal settlement offer to creditors of 45p in the pound.

But trading conditions in the DIY sector this year have been difficult, with big brand names such as B&Q - the biggest DIY chain in Europe - and Homebase both reporting falls in sales and profits. At Budget, losses continued to mount as cash reserves shrank.

Immediately before seeking the appointment of administrators on Friday, Hilco informed staff that no new stock could be introduced to Northern Ireland stores. They were told that attempts to find a new buyer for the remaining stores had been unsuccessful and warned that it was highly likely that store closures would be imminent.

According to Carlow, the company is now dependent on day-to-say sales to cover staff wages. "We will continue our efforts to realise the remaining stock and will clarify the position after we complete an assessment of the business. Our immediate objective is to determine the precise financial position and to ensure that staff are paid."

The retailer operates five stores in the greater Belfast area and one in Derry. At its peak, Budget DIY employed more than 400 people in eight stores.