Woolworths Group was left on the edge of failure and has MFI Retail collapsed, putting more than 30,000 British jobs at risk, after the economy's slide into a recession caused consumer spending to slump.
Woolworths, which opened its first shop in 1909, said this morning that it filed petitions for administration after an attempt to sell its retail stores ended. MFI appointed administrators yesterday.
Retailers are under pressure as a spending slump ripples through the UK economy. Higher food and energy bills are draining incomes as plunging stock and house prices erase wealth.
The government pledged £20 billion ($30 billion) of loans and tax cuts this week to spur the economy.
"The consumer economy got bad enough, fast enough,'' David Stoddart, an analyst at Altium Capital in London, said yesterday evening.
He advises selling Woolworths stock, which was suspended yesterday for the second time in a week.
Woolworths has more than 800 stores across the UK selling goods from candy to appliances. It employs almost 30,000 people, according to data compiled by Bloomberg.
Furniture chain MFI, which was hurt by weaker demand as house sales plunged, had about 190 British stores and 2,500 employees.
"The housing market has been the straw that broke the camel's back,'' said Bryan Roberts, an analyst at Planet Retail in London. "MFI is not the sharpest on pricing, and with people not moving house, that's massively hit them."
UK home sales are at the lowest level in at least three decades, the Royal Institution of Chartered Surveyors said November 11th. A seizure in credit markets has restricted banks' ability to lend even as the Bank of England cut interest rates to the lowest since 1955.
The spending dropoff claimed victims from Ilva Furniture to home wares retailer Rosebys, which both collapsed in September. Fashion chain MK One came under the control of administrators this month for the second time in 2008.
"This is a worrying time for employees, but part of the role of administration is to seek to save the business,'' a spokesman for the Department of Business, who refused to be identified in line with UK government convention, said yesterday of Woolworths.
Bloomberg