The management team that was parachuted in to rescue stricken UK retailer Courts has revealed a chaotic picture of mismanagement, including woeful standards of housekeeping that disguised a£13 million stock black hole.
Chairman Leo McKee, who joined in March, said a straightforward stock inventory of the UK stores and warehousing had uncovered the gap. He said assets sitting on the balance sheet simply were not there.
Broker Shore Capital warned: 'Due to uncertainties in ongoing cash flows, the auditors are unwilling to confirm their confidence in the ongoing viability of the business.'
Courts made a pre-tax loss of£34.4 million - compared with£11.5 million profit last year - on sales of£686.3 million in the year to March 31.
Father and son Bruce and Steven Cohen, heirs of the founding family and international managing director and UK managing director respectively, were ousted from those roles by the board this week. Bruce Cohen will become president on July 14, but will not have a seat on the board.
Turnaround specialist Alan Fort has been drafted in to run the UK chain, in place of Steven Cohen. Former WHSmith executive Bob Broadbridge has been brought in to wrest control of the supply chain.
Seymour Pierce analyst Richard Ratner said: 'We said some time ago that the sum of the parts might be worth more than the sum of the whole, or, as it is fast becoming, the hole.'