Jessops, the UK’s largest camera chain, goes under (UPDATE: All Jessops stores to close tonight)
posted Friday, January 11, 2013 at 12:19 PM EDT
“Camera Chain Jessops Collapses into Administration” read the crawl below the BBC-TV news presenters. Jessops, the largest camera retailer in the UK with 187 stores and 1,370 employees, had gone into administration, the British equivalent of filing for bankruptcy protection.
(UPDATE: Administrators have just announced that all 187 Jessops stores would be closed tonight and the 1,370 jobs would be terminated.)
The victim of a perfect storm of economic problems, the nearly 80-year-old business became the first “High Street” name of the new year to seek protection from creditors. (High Street is the British equivalent of the American “main street.”)
Since the credit crisis began in 2008, Jessops has been struggling. In 2009, HSBC Bank stepped in to save the company but, according to recent reports, it may be as much as £30 million ($48 million) in debt. This is, despite sales of £236million ($387 million) in 2012.
As one of the Administrators reported, in a thoroughly understated British manner, Jessops “has not generated the profits it had planned.”
A retail analyst, Neil Saunders, of the firm Conlumino, described it this way: "The amateur (photo) market collapsed because people who once bought cameras found that they had these things on their smartphones and they used those instead, and the professionals found that they could use online niche specialists who were cheaper and often had more extensive ranges. So both migrated away from Jessops."
In the United States, smartphones have depressed camera sales as well, with a year-to-year drop of 25% drop in 2012.
“Over the last few days, the directors, funders and key suppliers have been in discussions as regards additional consensual financial support for the business," Rob Hunt, of Administrators PWC, which is handling Jessops case, said.
“However these discussions have not been successful. In light of these irreconcilable differences the directors decided to appoint administrators. In the current economic climate it’s inevitable that there will be store closures.”
Key suppliers, according to sources, include camera giants Canon and Nikon, who they say have been “squeezing” the firm for payment. If true, this is a surprising turnaround from May 2012, when it was that reported that Canon was going to invest $16 million into the company.
Opened in 1935, in Leicester (UK) in 1935, by Frank Jessop, it refocused its photography store business plan in the 1960s when Frank’s son Alan joined the company. It advertised itself as a low-cost camera retailer and with that the chain grew until it had 300 stores throughout the UK. Following Alan’s retirement in 1996; management bought the company out, but after years of financial brinksmanship, there are only 187 stores and 1,370 employees remaining.
Another element in this whirlwind of trouble has been rental fees. British landlords, have been unable and reluctant to roll back exorbitant rent. Despite the sluggish economy and low demand for commercial property, too many landlords, having bought too much property before 2008 with “easy” money, are in no position to assist their tenants. Jessops reportedly had monthly rents in the millions of pound sterling.
Julie Palmer, of the business recovery group Begbies Traynor, said that, "With substantial cash outflows on the 25 December quarterly rent day combining with fierce pricing competition during the January sales, it puts significant pressure on finances.”
The pressure was finally too much for Jessops.
This situation is reminiscent of the business arc of Ritz/Wolf camera in the United States. Growing rapidly by buying up small camera shops just after 2000, Ritz/Wolf's overreaching brought the company in bankruptcy reorganization. Today instead of hundreds of Ritz and Wolf camera stores, there are just 14.
While Jessops stores remain open for business, customers who had received gift cards or cameras in December have seen their presents turn to coal in January. Going into Administration, Jessops announced that they will not honor gift cards or accept and exchange goods.
One of those hit by the Jessops collapse is Ronnie McQuillan, a film student, who won a prize of £1,500 ($2500) in Jessops vouchers in a competition. He had hoped to get a new camera prize but told the BBC: “I've been ringing the prize company today to see if I can get an alternative prize from another store. The company says they're going to let me know…so hopefully I will get a voucher for somewhere new. I'm disappointed because I've been looking at cameras online. It's a real shame."