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Friday, 22 May 2009

UK Birthdays Administration Places 2,100 Jobs at Risk

Clinton Cards Plc, the U.K.’s biggest greeting-cards retailer, said its unprofitable Birthdays chain collapsed into administration, putting 2,100 jobs at risk.

The company made the “difficult decision” to end funding of the 332-store chain, which was making annual losses of about 7 million pounds ($11 million), Loughton, U.K.-based Clinton Cards said in a statement today. Three partners of corporate advisory firm Zolfo Cooper were appointed as administrators.

Clinton Cards soared 37 percent in London trading after the company said the elimination of the unit’s loss would boost profit. Birthdays joins U.K. retailers Woolworths Group Plc, Zavvi Group and Adams Childrenswear Ltd. that have sought protection from creditors as the slowing economy saps sales.

“It is sad that we have reached this position, but this action will be earnings enhancing for Clintons,” Chairman Don Lewin said in the statement. A “significant element” of the Birthdays business is likely to have a “profitable and sustainable future,” he said.

The retailer expects to incur a non-cash writedown of about 44 million pounds. Clinton Cards posted a loss in its previous fiscal year after writing down the value of Birthdays by 30 million pounds. The purchase of the chain in December 2004 led to an increase in costs at the same time that competition intensified as food retailers and stationers expanded their ranges of greeting cards.

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Birthdays’ Irish unit and the main Clinton Cards chain aren’t affected by the action, the retailer said today.

Clinton Cards shares climbed 6.25 pence to 23 pence, the biggest percentage gain since at least May 1989.

“Forecasts will increase as the Birthdays loss is eliminated,” Altium Securities analyst David Stoddart said in a note. He increased his price estimate on the shares to 32 pence from 8 pence and raised his rating to “buy” from “sell.”

Clinton Cards also said today that sales at stores open at least a year were unchanged in the 13 weeks ended May 3, comprising a 0.6 percent decline at the main Clinton brand and a 2.3 percent increase at Birthdays.

Extracted from BBC
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