MFI staff await job loss news

More than 1,000 people will face the threat of job losses today after British furniture chain MFI confirmed it had called in administrators.

Hit by falling demand for “big ticket” goods, it blamed the accelerated downturn in the property market and “severe cash flow pressure” for the administration.

MFI said all customer orders would either be fulfilled or refunded and would be dealt with through its call centres – and not through any of its more than 100 UK stores.

Administrator MCR said a decision had not been made “as to an appropriate exit route and the future of the company” but moved to reassure that the 1,450 employees’ salaries would be paid.

Joint administrator Philip Duffy of MCR said: “In the meantime, all outstanding employee wages have been paid up to date and ongoing wages for retained staff will continue to be paid as an expense of the administration.”

He added MCR would be “reviewing the possibility of sale of some or all of the company’s stores”.

MFI said it had taken the “reluctant decision” to close 26 stores at the request of its landlord and previous owner, Galiform.

“This is despite the previous agreement that the majority of landlords would support the company with a rent waiver and agreement to assignment of the leases,” MFI said.

Galiform said it was “saddened” by the developments, while unions said they were not surprised by the news.

MFI chief executive Gary Favell led a management buyout of the firm at the end of September, when over a third of the stores were closed as part of the move.

But Mr Favell is said to have caused anger among existing landlords by demanding a “rent-free” period for three months to prevent the rest of the business also being put into administration.

In a statement last night, MFI said: “The administration follows the continuing pressure on the home market which has accelerated in recent weeks with sales levels falling further behind prior year levels.”

MFI is one of the UK’ s best known retail brands and established itself as a major player in home furnishing shortly after it was founded in 1964 by Noel Lister and Donald Searle – who called it Mulland Furniture Industries after Searle’s wife’s maiden name.

It started out as a mail order business but three years later opened its first shop, in Balham, south London and grew to become the biggest furniture retailer in the UK, with a value of £1bn (€1.18bn) at one point.

But its position as market leader was hit by the growth of rival stores such as Ikea, B&Q and Homebase.