The owner of troubled wine retailers Threshers and Wine Rack insists it is committed to their future, despite auditors expressing ‘material uncertainty’ about their ability to continue trading.
But hundreds more loss-making shops could close over the next year as First Quench Retailing (FQR) battles to build a sustainable business model on the back of a £30m pre-tax loss in the year to 28 June 2008.
Company auditor Ernst & Young added an ‘Emphasis of Matter’ to FQR’s accounts, an accounting term which raises ‘material uncertainties’ about a company’s ability to continue as a going concern.
But a spokesman for Vision Capital, the private equity group which bought FQR in 2007, pointed out that the comments related to the year to last June.
‘At that stage, FQR was only six months into its turnaround plan,’ he said. ‘It’s also important to realise that it’s owned by a private equity company, a solid backer with no intention of exiting the company.’
FQR is now embarked on an aggressive store closure programme, with 162 shops shut since last December, and more to follow over the next year.
Reports have suggested that 400 shops out of a current total of about 1,400 could close, but FQR could not confirm this.
The strategy also includes a rebranding of Wine Rack, the positioning of The Local as an off-licence-cum-convenience store, and a remerchandising plan for Threshers.
Written by Richard Woodard