100 jobs on line at Ilva furniture store

Jun 26 2008 by Andrew Mernin, The Journal

THE jobs of around 100 North workers at furniture company Ilva were thrown into jeopardy last night as the firm went into administration.

The business, which employs around a quarter of its 400-strong workforce at its 120,000 sq ft store at Gateshead’s Metro- Centre, entered into administration due to increasingly challenging conditions in the retail sector.

Staff were told that the company’s Icelandic owners planned to pull out of the UK market with restructuring firm Kroll appointed as administrator.

Ilva’s last annual accounts reported losses of £62m. The Gateshead store, alongside the group’s other UK outlets in Manchester and Thurrock, will continue to trade until a buyer is found.

Administrator Peter Saville reassured customers that the company would honour all orders and blamed tough conditions for the firm’s demise.

He said: “The trading environment for all retailers is particularly tough at present but we are continuing to trade the business as a going concern. These stores have a strong brand identity and are situated in excellent retail locations.

“Although the retail sector as a whole is facing challenges at present, there are still many opportunities to succeed.”

The news is the latest setback for the furniture industry, which has been hit by a slowdown in consumer spending on big ticket items as the credit crunch bites.

Earlier this week, Sunderland-based sofa retailer ScS Upholstery suspended trading in its shares as the company tottered on the brink of collapse while fellow sofa chain Land of Leather has been forced into an emergency rights issue. It revealed a 35% fall in like-for-like sales and said the appalling conditions affecting the furniture market would continue well into 2009.

Ilva, which is Denmark’s second largest furniture retailer, first opened its doors in the region in 2006 when it took on 350 workers at the site formerly occupied by the Marks & Spencer Lifestore, which itself closed only months after opening.

The staff numbers at the store have dropped considerably since then while initial plans by the group to open 20 UK stores by 2010 were clearly over-ambitious.

When Ilva launched in Britain two years ago, it was seen as a potential rival to fellow Scandinavians Ikea, which has a big store adjacent to Ilva’s Gateshead site. But last summer its UK arm was sold to an Icelandic corporation which also owns The Pier.

Although the retail sector is facing challenges, there are many opportunities to succeed