Auditor of clothes and homeware-seller Shop Direct warns over retailer’s ability to continue trading
The auditor of clothes and homeware-seller Shop Direct has warned over the retailer’s ability to continue trading.
Deloitte said there was ‘material uncertainty’ as to whether it can continue operating after a cash injection to plug a gap caused by a massive PPI bill was delayed.
New funding from the company’s owners, the Barclay brothers, was among the options being considered.
Decision time: Shop Direct owners Sir Frederick and Sir David Barclay, who also own Telegraph Media Group
Shop Direct, which owns the Littlewoods and Very brands, said a late rush for payment protection insurance compensation had left it with a £175m shortfall.
The Liverpool-based group, which often sells on credit to lower-income consumers, needs to find a further £150m.
The delay in plugging the gap cast ‘significant doubt on the ability to continue as a going concern’, its auditor Deloitte said. Shop Direct, which has been hit by £550m of misselling claims, said: ‘We expect funding to be in place shortly. The business continues to trade well.’
It comes as Sir Frederick and Sir David Barclay, 85, gear up to sell their empire, which includes the Ritz Hotel and the Telegraph newspaper. They made an £8bn fortune after starting out in the 1970s converting London boarding houses to hotels.
They are said to be considering bids for Telegraph Media Group, courier service Yodel and the Ritz, which would have a price tag of £800m.
Advisers have not been hired for Shop Direct, it is understood, and the brothers are said to be ‘keen to keep their stake’ in the online retailer.