My Local has moved a step closer to collapse after the convenience chain filed a Notice of Intention to Appoint Administrators.
It is understood that it has lined up KPMG to handle the process and while management continue to try and save the business it could fall into administration in the next couple of weeks.
Shopworkers union Usdaw said that My Local was briefing staff yesterday. The retailer currently has 125-stores and employs 1,658 staff.
“My Local staff are devastated by the news that the company is going into administration. Having been sold by Morrisons last year, there was a mood of optimism that the new owners could turn around the business,” said Usdaw national officer Joanne McGuinness.
“We are talking with the company in a bid to save jobs and get the best deal for staff. In the meantime Usdaw is providing the support, advice and representation they need at this unsettling time.”
The retailer has been trading for less than a year having bought 130 M Local convenience stores from Morrisons last September for £25m. The company is run by industry veteran Mike Greene and backed by private investment firm Greybull Capital.
However the chain has been beset with difficulties from the outset. After failing to reach agreement with Morrisons over a price for the remaining stock, the supermarket emptied the stores just before My Local was due to launch in October. This resulted in many store openings being delayed, while others opening with huge gaps on the shelves.
The availability issues continued for more than a week and the chain also struggled to match Morrisons’ quality and prices which resulted in the businesses’ overall sales volumes lagging behind how they performed under Morrisons.
At the My Local supplier conference in February, Greybull owner Nathaniel Meyohas insisted that sales were improving and that it was determined to back My Local in the long term.
However it is thought the trading issues have been compounded by the introduction of the National Living Wage and in recent weeks it has emerged that My Local was looking to offload around 25 stores.
It was also announced yesterday that Raj Krishan, format and development director at My Local, has been unveiled as the new sales director for Blakemore Wholesale Distribution.
Krishan, who joined My Local last September as part of the original management team put together by Greene, will take up his new position on 18 July.
It has been reported that previous owner Morrisons could be landed with a bill of £20m should My Local collapse as the liability for the rents on many of the properties will revert back to the supermarket group. However The Grocer understands the actual figure would be significantly less as Morrisons would have the option of leasing the properties out again or negotiating a better deal with landlords.
Morrisons also said today that it would look find positions for any former employees who lose their jobs should My Local not be able to continue trading.
“We are saddened and disappointed to learn that My Local is about to enter administration,” said a spokesman. ”We want to help our former colleagues who now work for My Local. We can therefore confirm that if no buyer is found, and stores close, we will welcome our former colleagues back to a job at Morrisons.”
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