Slump in housing floors carpet firm as chain goes into administration

By OLINKA KOSTER FOR MAILONLINE
Updated: 19:03 EDT, 17 July 2009

Hundreds of jobs were at risk last night after Allied Carpets went into administration.

The company is the latest household name to have been badly hit by falling sales as the recession and slow housing market cut the number of customers.

The chain has 217 stores and is a familiar presence in shopping centres and out-of-town retail parks nationwide.

Feeling the pinch: Allied Carpets has gone into administration

But, like many retailers, it has suffered in recent months because of a downturn in spending, leaving up to 1,100 staff in danger of redundancy.

Administrators said Allied Carpet stores would continue to trade normally in the hope the business will be sold.

A lack of movement in the housing market means fewer people are decorating new homes.

At the same time, families are holding back from fitting new flooring and carpets in their current homes. Instead, they are paying for essentials or saving money in case of redundancy.

Allied Carpets, which is the second biggest carpet retailer in the UK behind Carpetright, employs around 1,500 workers.

However, 51 stores and the firm's insurance inspection business were sold immediately, saving 400 jobs, said administrator BDO Stoy Hayward.

The blow follows official figures this week which showed a record quarterly jump in unemployment, bringing the total to 2.38million.

Nearly 3,300 workers are being made redundant every day, with unemployment set to rise above 3million next year.

180 employees at Parker Pen could lose their jobs

However, many job losses go unnoticed because they are accounted for by smaller firms laying off lower numbers of workers.

While some retail sectors have seen an improvement in sales, furniture and carpet stores have had to resort to slashing prices to bring customers in.

Last month Carpetright reported a 72 per cent drop in profits and 7.4 per cent fall in sales.

Dermot Power, spokesman for the administrators, said Allied Carpets had suffered in difficult trading conditions.

'The stagnation of the housing market has meant that fewer people are buying carpets and flooring,' he said.

'We are working to secure a going- concern sale of the remaining stores in the Allied Carpets portfolio.'

Customers have been promised that outstanding orders will be fulfilled and that all deposits are safe. Staff wages will also be paid as normal.

The news came as up to 180 employees at Britain's best-known pen manufacturer, Parker Pen, also learned that their jobs could be axed.

The firm announced that its factory in Newhaven, East Sussex, could be closed within a year, with work shifted to its site in Nantes, France.

It is believed some employees may transfer to its other UK base at Lichfield, Staffordshire, which employs 350 people.

Norman Baker, MP for Newhaven, said it would be a 'bitter blow' for the town. He urged the firm to reconsider its plans for the factory, which opened in the 1940s.

Parker Pen made the decision after reviewing market trends and its fine writing business.

Andy Smith, director of manufacturing, said: 'This has been a difficult proposal to make and is a response to structural issues, accelerated by market trends.

'Global trends mean that the present production structure is too large. The structure generates much excess capacity and leads to under-utilised resources.'