Jessops holds talks with lenders as losses widen to £19 million - The Independent

Discussion in 'UK Photography' started by Bruce, Jan 31, 2009.

  1. Bruce

    Bruce Guest

    By James Thompson
    Saturday, 31 January 2009

    Jessops is set to breach its lending agreements and is mulling a
    debt-for-equity swap with its bank, the struggling camera specialist
    warned yesterday, as it posted widening losses and its auditors raised
    questions over its future.

    The 230-store retailer said it was not likely to meet its banking
    covenants and that it is in discussions with banks about putting in
    place a new covenant test and restructuring its net debt of £57.4m.
    Jessops is understood to be considering swapping a chunk of its debt for
    equity in the coming weeks with HSBC, which holds about 15 per cent of
    the retailer's shares.

    David Adams, the executive chairman of Jessops, said: "We can't carry on
    carrying £57m worth of debt on a business which is generating £4m.

    "We are actively engaging with our advisers and HSBC Bank to put the
    business on a more stable footing for the future. It is highly likely
    that this exercise will involve a fundamental restructuring of our

    The scale of the challenge facing Jessops was laid bare by its auditors,
    who said the conditions relating to the restructuring of its banking
    facilities "indicate the existence of a material uncertainty which may
    cast significant doubt on the company's and the group's ability to
    continue as a going concern".

    Asked if Jessops was at risk over the next year, Mr Adams said: "We have
    a good chance, but there is no guarantee." He warned: "We believe we
    have a viable business model and a good position in the market place,
    but we now have to address the balance sheet."

    For the year to 30 September, Jessops delivered a loss before
    non-recurring items and tax of £19.1m, compared to £9.3m for the
    previous year. Its total loss after tax for the year was £50.2m.

    Mr Adams said it was "not clear when economic conditions will improve",
    but said Jessops had focused on improving margins and had significantly
    reduced stock levels during the period with further reductions since the
    year-end. The retailer's like-for-like sales fell by 6.5 per cent for
    the year to 30 September, compared to an 8.5 per cent decline for the
    previous year.

    Mr Adams described current trading as the "the most difficult and
    uncertain trading conditions that we have seen in the photographic
    market for a long time". For the year to 30 September, digital camera
    sales in the market were flat.

    Jessops' underlying sales rose by 3.8 per cent for the eight weeks ended
    25 January 2009, but this was driven by hefty discounting that
    contributed to a 4.2 per cent fall in its gross margins. Jessops' shares
    fell by 0.57p, or 20.7 per cent, to 2.18p yesterday.

    The retail outlook continues to look challenging across the high street.
    Savers, the 237-store discount health and beauty chain, has become the
    latest retailer to request rental concessions, including payment
    holidays, from landlords. An AS Watson UK spokeswoman said: "Savers can
    confirm that we have written to a number of landlords with regard to
    negotiating more favourable rent and rate terms in the current economic
    Bruce, Jan 31, 2009
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  2. Bruce

    Justin C Guest

    Could be good news for the few remaining independent photography stores
    that are left.

    I've never liked Jessops, I've found customer service to be seriously
    lacking. Staff either lack knowledge or look down their nose at the
    serious amateur; it seemed to me that, unless you knew what you wanted
    and didn't need to ask questions about it, that they felt you were
    wasting their time. I won't be sorry if they fold.

    Justin C, Jan 31, 2009
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  3. Bruce

    Rob Morley Guest

    It varies very much between shops - the local staff are pleasant,
    helpful and knowledgeable, even when I present them with requests for
    small obscure items. I doubt they think I'm a prospect for a big
    purchase when I take in stuff like a 4x4 TLR that needs a cable adaptor,
    or buy their clearance B&W paper. They're just as good explaining
    really basic stuff to OAPs buying their first digital cameras, showing
    people how to use the printers ...
    Rob Morley, Jan 31, 2009
  4. Bruce

    Bruce Guest

    I would agree with you, but for one thing. In many towns, Jessops
    bought out good, reliable and often family-owned businesses and turned
    them into clone Jessops outlets. In many (most?) cases, Jessops are now
    the only game in town.

    So while I would shed no tears over Jessops demise, I would feel sad for
    people whose town previously had a good local camera shop, which was
    then degraded to a Jessops, which then closed leaving nothing at all.
    Bruce, Jan 31, 2009
  5. Bruce

    Bruce Guest

    Jessops is the new Dixons.

    Both used the same business model; high street locations, high prices,
    ignorant staff and poor customer service. Both suffer(ed) from
    competition that offered lower prices and/or better service.

    Dixons has quit the high street (good riddance!) and Jessops, unless
    they can really get their act together, will surely go the same way.
    Bruce, Feb 3, 2009
  6. Bruce

    Bruce Guest

    Someone who is sitting on a pile of cash following the sale of his long
    established electronics business to BSkyB? Alan Sugar. ;-)
    Bruce, Feb 7, 2009
  7. Dixons haven't quit the high street, they changed their name to
    Mike of Wrexham, Feb 9, 2009
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