Receivers called in at Powerhouse

POWERHOUSE, Britain's largest independent electrical goods retailer, is expected to make more than 800 staff redundant after falling into administrative receivership today.

The Bicester-based group is closing 93 of its 223 stores across the UK in a drastic bid to survive and safeguard the jobs of its remaining 2,200 employees. Deloitte & Touche were appointed administrators today after trade insurers unexpectedly withdrew their cover from Powerhouse suppliers.

Deloitte partner Nick Dargan said: 'We are carrying out a rapid assessment of the company's operations with a view to selling the business as a going concern.'

PowerHouse, the third-largest electricals retailer after Dixons and Comet, last year notched up sales of £319m from more than 230 stores after the acquisition of 98 Scottish Power retail outlets. It reported a rise in pre-tax profits from £2.5m to £6m.

Recently, it said it was reviewing the future of almost one quarter of these stores, amid signs that trading has been tough. Despite booming demand for electrical goods, the sector has been a graveyard for smaller retailers who lack buying power. In 2001, Tempo went bust.

PowerHouse chairman and chief executive Derrick Broomfield said: 'The trade insurers of some of our suppliers have re-assessed their view of the risk profile of their client's industry.'

The insurers, who give suppliers a guarantee that PowerHouse will pay its bills, apparently got the jitters about its finances.

The group had been engaged in emergency talks aimed at finding an solution to secure the supply of goods to the stores.

There are four main insurers for electrical goods wholesalers. They offer suppliers a safety net on payment because there is often a long time lag between orders and final payment.