USC, the fashion chain backed by Scottish entrepreneur Tom Hunter, became the latest retailer to fall prey to the consumer downturn on Monday, despite signs of a strong start to post-Christmas sales.
By Victoria Bryan and Mark Potter
Hunter's investment vehicle, West Coast Capital, said USC, which sells brands including Diesel, Miss Sixty, Ted Baker and Lacoste, had appointed consultants PKF as administrators.
But it also said that Hunter was buying 43 of USC's 58 stores out of administration, safeguarding 1,127 jobs.
The remaining stores, which remain in the hands of PKF, employ 300 people, more than half of whom work part time.
Retailers are struggling as indebted shoppers curb spending amid rising unemployment and fears of a deep recession.
Several well-known chains have already fallen victim. Woolworths and furniture group MFI both entering administration, a form of creditor protection, before Christmas.
Children's wear retailer Adams said on Sunday it expected to appoint PriceWaterhouseCoopers as administrators this week.
There have been signs that deep discounting has lured some consumers back into the shops recently.
Market research group Experian said on Saturday that the number of shoppers on December 26 was up 12.5 percent on the same day last year, while department stores chain John Lewis said on Sunday it had its busiest ever day on the December 27, the first day of its post-Christmas clearance sale.
But IHS Global Insight Chief UK and European Economist Howard Archer thought the strong start to clearance sales was a sign of how desperate shoppers were for bargains.
"We strongly suspect that the sales effect will be temporary and that retailers will face a desperately difficult 2009," he said.
"This will keep pressure on them to price competitively through next year, which will obviously impact on margins. As a result, many more retailers seem likely to go under in 2009."
BAUGUR DENIES ASSET SALE TALKS
PKF declined to say how much West Coast was paying for the 43 stores being bought out of administration.
"The impact of the credit crunch is continuing to spread into the wider economy beyond the property and financial sectors," Bryan Jackson, a corporate recovery partner at PKF, said in a statement.
"Given these circumstances, this is a positive deal which retains the majority of jobs and shops to ensure the core part of the USC business will continue with further investment to assist in the future survival of the remaining 43 stores."
Separately, Icelandic investor Baugur said it was not in talks to sell its stakes in UK retailers, including department stores chain House of Fraser and fashion chain Karen Millen, to the Icelandic government.
Earlier the Financial Times said plans were being drawn up for the Icelandic government to take over Baugur's investments as part of a reform of the country's collapsed financial and corporate system.
Baugur owes debt to Icelandic banks, which were seized by the state earlier this year.
"Baugur would like to clarify that no discussions are taking place with regard to the acquisition of a stake in Baugur's assets by the Icelandic Government," it said in a statement.
(Editing by David Cowell, Leslie Gevirtz)
LONDON (Reuters)