Carpetright is preparing to call in administrators with almost 2,000 jobs at risk as it reels from a slump in demand and the after-effects of a cyberattack.
The retail chain, which has around 270 shops across the UK, filed a notice of intention to appoint administrators on Friday, giving it 10 days of legal protection from creditors as it races to shore up new investment.
Advisory firm PwC has been lined up to act as administrator if no solution can be found.
The retailer is still reeling from a cyber attack in April, when it was unable to trade for a week.
Kevin Barrett, chief executive of Carpetright owner Nestware Holdings, said bosses are “focused on securing external investment to ensure as few customers and colleagues are impacted as possible”.
He added: “They are our main priority and we are taking all appropriate action to make sure they are informed and supported through this process.
“We have begun promising conversations with interested parties that are moving in the right direction, encouraging us that Carpetright has a viable future.”
It is thought that talks are under way with rival flooring company The Floor Room, as well as B&Q owner Kingfisher and turnaround outfits including Gordon Brothers and Hilco. The notice will, however, spark concerns among the thousands of staff who work at Carpetright after a spate of redundancies already took place earlier this year.
It follows a tough few years for the company. Carpetright was previously listed on the London Stock Exchange before being bought by its biggest shareholder in a cut-price £15m deal in 2019.
Meditor, a hedge fund run by Talal Shakerchi, former Old Mutual banker and poker player, took over Carpetright with the promise of helping it to achieve a turnaround. At the time, Carpetright had been loss-making. It has not made a profit since the takeover, Companies House filings suggest.
Earlier this week, it emerged that Carpetright had recently been put up for sale amid concerns over its cashflow.
It said on Friday that “financial pressures” from the software attack, which had also impacted restructuring plans, “resulted in the company seeking a period of protection whilst sale negotiations proceed”.
At the same time, Carpetright has been struggling with a broader slowdown in sales as the cost of living crisis weighs on demand for big ticket items. The recent slump in the property market has meant fewer people are looking to spruce up new home purchases with fresh carpets and floors.
It has also been facing fierce competition from rival Tapi, which was founded by Martin Harris – the son of Carpetright founder Lord Harris of Peckham. Lord Harris, who took over the family flooring business when he was 15, stepped back from Carpetright in 2014.
Martin Harris set up Tapi in 2015. He stepped down as chief executive four years ago and gave up his vice chairman post earlier this year. Tapi swung to a loss in 2022, according to its most recent filings, although sales were up year on year.