Embattled off-licence operator First Quench Retailing has a future despite a question mark hanging over it, director John Cleland vowed this week.
It is understood that Cleland – part of the team that turned around Somerfield before its sale to Co-operative Group – is to take a hands-on role at the retailer, which is likely to undergo radical restructuring.
Cleland would not comment on his future involvement or speculation that as many as 600 of the retailer’s 1,300 shops will close, including convenience fascia The Local. KPMG has been appointed to advise on options, including a possible pre-pack administration or CVA.
Cleland told Retail Week: “We have set out our transformation plan and the vision we have for the business will follow that plan. We expect to continue to improve the business and it is a good business.”
One source said: “Cleland has been working on some brand profiling and has found that The Local overlaps far too much with Threshers so that fascia isn’t needed.”
First Quench – whose fascias also include Wine Rack and Haddows – is expected to reveal restructuring plans next week. A spokeswoman for the group said the board has been “actively considering a number of restructuring and strategic options” and blamed the “credit crunch” for making “a very competitive marketplace even more challenging”.
First Quench has been working on a business transformation programme since the beginning of the year after the group had some of its credit insurance withdrawn and it has been dogged by supply issues.
The transformation programme was established to address factors such as the customer proposition, improved ranging, operational efficiency and availability.
Internal meetings have been held with staff regarding KPMG’s appointment, and one source said speculation about administration had “neither been denied nor clarified”.
Supply problems have infuriated the 90 franchisees in particular and they were preparing for a likely showdown with the retailer’s management.
One franchisee said: “We will get together to form an action group to find out what the company will do if there is an administration. But if there are continual supply problems, we won’t last much longer.”
Mark Abell, head of the franchising and licensing practice at Field Fisher Waterhouse, said: “Franchisees should get together if there is an administration as they may face personal bankruptcy.
If they act swiftly, they could throw a spanner in the works of a pre-pack to ensure they get some sort of compensation.”