MFI goes into administration

Listen to this article

00:00
00:00

MFI, the kitchen retailer, went into administration on Wednesday night in what may finally herald the disappearance of the perennially struggling chain.

After a sharp deterioration in sales last month, the company failed to secure a stay of execution from all of its landlords and Kroll, which is in charge of the company’s property.

MCR, the restructuring company, was appointed as administrator.

MFI was bought in September for a nominal sum by a management team that was led by chief executive Gary Favell, who acquired it from Merchant Equity Partners, the niche private equity house.

Both owners failed to drag the business into profit against the background of a worsening economic outlook.

The chain was previously spun out of Galiform, which remains publicly listed and will inherit leases vacated by MFI.

Galiform’s shares have lost 80 per cent of their value in the last 12 months, partly on fears that it would not be able to cope with paying rent on the MFI stores.

However, the company said in September that it had adequate funds to cover the £14.7m annual rent bill on the 46 stores that it would inherit. It has already taken back ownership of 20 sites.

Mr Favell said two months ago that the company had “the capital to provide continuity and security for our customers” and the buy-out would “safeguard employees within the store network”.

Some 3,100 staff were employed by MFI at the time, although some have since left. The remainder will lose their jobs if, as expected, MCR fails to find a buyer for the business.

Copyright The Financial Times Limited 2017. All rights reserved. You may share using our article tools. Please don't copy articles from FT.com and redistribute by email or post to the web.