UK retailer Comet shutting down, 6,900 jobs lost

AP News
Posted: Dec 18, 2012 11:00 AM
UK retailer Comet shutting down, 6,900 jobs lost

LONDON (AP) — British electrical retailer Comet is about to close its doors for the final time after nearly 80 years.

The last 49 stores of what was a 235-strong chain are closing Tuesday evening after Comet's new owners failed to come up with a strategy to deal with a sour British economy and the online shopping revolution.

The end of Comet, which started operating in 1933 from the northern English city of Hull, will cost 6,900 people their jobs, while the government will be left holding the bag for nearly 50 million pounds ($810 million) in unpaid taxes and the cost of paying off employees.

Unsecured creditors, mainly landlords, are owed 233 million pounds, according to Deloitte, which was called in last month to try to save the company or liquidate it. And the government announced that a fact-finding inquiry has been launched into the company's failure to determine whether further action is required.

Comet's demise is the latest in a string of failures on Britain's high streets over the past few years.

This year a number of companies have run into trouble, including fashion retailer Peacocks, which was forced into administration, a form of bankruptcy. Eventually it was taken over in a deal that saved 6,000 jobs but cost 3,100 more.

And Sports Direct stepped in to rescue 100 of the 180 stores of JJB Sports in October, a deal which saved a thousand jobs but sacrificed 3,000. U.S. company American Greetings also picked up about 400 stores from Clintons Cards in June, a bit more than half the estate, cutting employment from 7,500 to 4,500.

As in many parts of the world, retailers have struggled to respond to the host of retailers online, including, that often offer big discounts.

In Britain, retailers have also struggled in the face of a nine-month recession that only ended in the third quarter of 2012, largely because of a summer boon related to London's hosting of the 2012 Olympic Games.

Most forecasters think the British recovery will be patchy over the months and years to come as the country's main trading partners in Europe struggle in the face of a debt crisis and the government continues to cut costs and raise taxes in order to get the public finances back into shape.

The future of Comet has been in doubt since French-based Kesa Electricals — now known as Darty — sold Comet for 2 pounds last year to Hailey Holdings and gave the buyers a dowry of 50 million pounds.

Comet was the second-largest electrical appliance in the country with about a 5 percent market share, or a fourth as much as market leader Dixons.