LONDON - Furniture retailer MFI is facing very tough times as major shareholders in the company want a massive restructuring plan in place before the company begins to fall apart.
Some investors are even pushing for selling the furniture business so that they can concentrate on buliding the vastly successful Howden Joinery business. This segment sells kitchens to builders and small developers and is the only bright spot for MFI whose order book had slowed to a trickle in the first half of the year.
“The profit warning came as yet another nasty surprise. We now assume it takes five years to get MFI UK back to break-even,” said Rod Whitehead, a retail analyst at Deutsche Bank. He expects the furniture segment to lose about £50 million this year and when that kind of money is at stake there are bound to be calls to sell. The man who must be the most worried of the lot is surely John Hancock, chief executive of MFI. His job appears to be anything but safe at the moment and he warned that the retailer could cut more jobs in a bid to become cost-effective.
"We've taken 400 jobs out over the summer. Clearly we will be going back and assessing all our costs. I can't promise that we can maintain employment at current levels in this situation," Hancock told shareholders and analysts yesterday. Hancock was brought in to revive the company and it must be said that he gave a fair try. But the UK market has forced all retailers to eat humble pie and MFI has not been spared either.
Mal Patel, a retail analyst at Merrill Lynch advised clients expect sweeping changes at the retailer, “MFI’s management team has unraveled somewhat in the past six months and investors may call for a more radical approach to value creation than new appointments alone,” he said.
Posted
on : Mon, 12 Sep 2005 07:05 GMT | General News
By : Pippa Fielding
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