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TJ Hughes puts administrators on standby

TJ Hughes has today filed an intention to appoint an administrator.

The discount department store chain, which was acquired by private equity firm Endless in March, has found trading difficult in light of the withdrawal of credit insurance.

Ernst & Young is on standby. A source close to the situation said an administration will be “very difficult to avoid”.

Like-for-likes have been running at -19% since Endless took the company on. The retailer suffered from low stock levels as suppliers lost confidence in the business.

In the year to January 31 the retailer lost more than £10m and was on the brink of collapse when Endless acquired it for a “nominal amount” in March.

At the time Endless ploughed £9m of working capital into TJ Hughes, but to take it through to the peak September trading period Endless would have to inject a further £30m, which an Endless spokesman said would be “impossible”.

The notice of intention to appoint an administrator was filed after a supplier threatened to file a winding up notice against TJ Hughes.  Endless said the move is a precautionary measure to give the retailer more breathing space.

It is understood that several retailers are interested in acquiring stores, should TJ Hughes hit the buffers. Endless is looking at the possibility of carrying the business on with 20 to 30 stores.

Rent was paid last week and wages will be paid this week, the Endless spokesman assured.

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