5,500 jobs at risk as Maplin and Toys R Us go bust — and Maplin blames Brexit
- Maplin and Toys R Us both fall into administration on Wednesday.
- The retailers employ a combined 5,500 people and all these jobs are now at risk.
- Maplin CEO blames "sterling devaluation post-Brexit, a weak consumer environment and the withdrawal of credit insurance."
Electronics retailer Maplin and the UK business of Toys R Us both fell into administration on Wednesday, putting over 5,000 jobs at risk.
Maplin called in administrators to rescue the business on Wednesday after crunch talks with creditors to save the company fell through. The electronics retailer has 200 stores across the UK and employs 2,500 people.
CEO Graham Harris blamed "macro factors" including the collapse in the value of the pound post-Brexit vote, which has dented consumer confidence.
Harris said in a statement: "The business has worked hard over recent months to mitigate a combination of impacts from sterling devaluation post-Brexit, a weak consumer environment and the withdrawal of credit insurance."
The pound slumped to a multiyear low against the dollar and euro in the immediate aftermath of June 2016's Brexit referendum. This pushed inflation up to 3% in the UK, streaking ahead of wage growth and giving UK consumers less money in real terms to spend at the shops.
Harris said: "This necessitated an intensive search for new capital that in current market conditions has proved impossible to raise. These macro factors have been the principal challenge, not the Maplin brand or its market differentiation."
RELATED: Check out popular retail brands that filed for bankruptcy in 2017:
PwC was appointed the administrator of the company.
Retail analyst Richard Hyman told Business Insider that it is "difficult to make such a disparate product offer work in stores."
"Maplin is like the Woolworths of gadgets, selling a vast array of different items and that scale of stock complexity is expensive to operate," he said.
'Toys R Us had no means of competitive defence'
Earlier on Wednesday Toys R Us fell into administration after failing to find a buyer. Its US operation filed for bankruptcy last year. The company has over 100 stores across the UK and employs 3,000 people.
Hyman said: "Toys R Us is a retail format that really hasn't changed at all since it first landed here. It was a disruptor in its own right back then, bringing one-sop-shopping to toys on a massive scale.
"The shopping experience has always been deeply unattractive — you went for price, breadth of range, and convenience. It worked OK until online came along and delivered these three things far better and Toys R Us had no means of competitive defence."
Simon Thomas, the joint administrator and partner at Moorfields, said in a statement: "We will be conducting an orderly wind-down of the store portfolio over the coming weeks. All stores remain open until further notice and stock will be subject to clearance and special promotions. We're encouraging customers to redeem their gift cards and vouchers as soon as possible.
"We will make every effort to secure a buyer for all or part of the business. The newer, smaller, more interactive stores in the portfolio have been outperforming the older warehouse-style stores that were opened in the 1980's and 1990's.
"Whilst this process is likely to affect many Toys R Us staff, whether some or all of the stores will close remains to be decided. We have informed employees about the process this morning and will continue to keep them updated on developments. We are grateful for the commitment and hard work of employees as the business continues to trade."
Hyman said both Maplin and Toys R Us are victims of online competition as well as the headwinds that contributed to their immediate downfall.
"A bit like Toys R Us, online has eaten away at Maplin's competitive position," he said.
He added: "I forecast that 2018 would be the year of retail distress and it's turning out to be exactly that."
More from Business Insider:
3 crypto exchanges are planning to hire more than 1,000 staff — but it's not going to be easy
Israel's Bezeq names Paz as acting CEO during police investigation
Indonesia seizes luxury yacht linked to 1MDB investigation: police