UPDATE: Carpetright has filed a notice of intention of appoint PwC as administrator at the High Court. This gives it ten days of protection from creditors.
Talks are understood to be taking place over rescuing the 272 store through sister company The Flooring Room, the operator of John Lewis’s flooring concessions.
The Times has also reported that B&Q owner Kingfisher and investment firms Hilco, Gordon Brothers and Alteri have also been approached to gauge potential interest.
Staff have been told to stop issuing refunds.
Kevin Barrett, chief executive of Carpetright parent Nestware Holding is predicting a quick sales of the chain after owner Talai Shakerchi appointed one of big four accountancy firms to find a new buyer.
It has recruited PwC to oversee its sale. This is expected to lead to an insolvency event such as a pre-pack administration and/or CVS as any new owner looks to further reduce costs.
Barret told staff he expected a sale to ‘progress quickly as all parties focus of achieving a positive solution for the business and implementing the turnaround plan,’ The Times first reported.
Shakerchi, a internationally successful poker player, took ownership of the flooring chain in 2019. Carptright turned to him to secure emergency funding through his venture capital company Meditor, before it bought the chain’s £30m debt and became its largest shareholder.
Shareholders were then faced with little choice but to accept its below stock-market valuation offer of £15m which saw Meditor take full control.
A CVA was then implemented with saw swathes of loss-making and performing stores closed along with those where landlords did not accept huge cuts in rent.
This spring saw it appoint Teneo in an effort to cut costs. A month later it presented a package that would save £22m a year by cutting 70 staff across head office, IT, warehousing and field management.
‘While we have worked tirelessly to navigate our current challenges, we understand the impact this restructure will have on valued members of our team. Our top priority remains supporting those affected through this process,’ says said at the time.
‘As with many businesses, we face ongoing challenges in today’s tough economic climate. We’ve carefully examined our performance against operating costs, leading us to make difficult decisions to ensure the future success of our brand.
‘Unfortunately, this means reducing our central payroll costs. Whilst every effort has been made to seek the best solution to our current situation, we are aware that valued members of our team will be impacted.’
The cuts came after the chain saw its IT systems hacked for ransom, leaving stores unable to process orders and head office employees unable to access systems.
Any restricting is set to cause concern among consumers over outstanding orders and suppliers over unpaid invoices. It also raises questions about the operations of John Lewis’s flooring concessions operator The Flooring Room, which uses Carpetright’s IT and back-office systems.
