Palmer and Harvey, the UK’s biggest delivered wholesaler today (November 28) went into administration following failed rescue talks.
Administrators at PwC have said 2,500 jobs will be lost, with immediate effect.
The firm had been in takeover talks with private equity firm Carlyle (Wholesale News, November), but these fell through.
P&H, which is the UK’s largest tobacco supplier, the country’s fifth-biggest private business and the largest employee-owned firm after John Lewis, had been struggling with debts and owed substantial sums to key suppliers, including tobacco giants JTI and Imperial Brands.
It supplies about 90,000 outlets around the UK including major supermarket chains such as Tesco, convenience stores, corner shops and petrol station forecourts.
PwC said the group had been “hit by challenging trading conditions in recent months and efforts to restructure the business have been unsuccessful.
“This has resulted in cash flow pressures and it has not been possible to secure additional funding to support the business.”
P&H employs about 3,400 people at its 14 depots and PwC said it had “unfortunately been necessary to make about 2,500 immediate redundancies at head office and the branch network”.
The remaining employees would “assist the joint administrators in managing the activities of the business to an orderly closure”.
It is understood that PwC is exploring options for a sale of viable subsidiaries, but the van sales operations P&H Direct Van Sales, P&H Sweetdirect and P&H Snacksdirect, have already ceased to trade.
One of P&H’s biggest customers, symbol group Costcutter, said it was searching for other suppliers.
“We have activated our contingency plans to provide alternative sources of supply through appropriate regional and national options,” a Costcutter spokesman said. Other, non-affiliated independents will be anxiously looking for new suppliers, and observers hope that other wholesalers will be able to step in.
JTI, one of P&H’s biggest suppliers and a creditor, said it had been informed earlier today that the company had “unfortunately entered administration”.
“Throughout the whole process JTI has worked continuously to facilitate a constructive solution to the P&H Group’s challenges including extending significant financial and operational support to allow P&H to continue its operations.
“Regrettably our considerable efforts were not successful. We have a contingency plan in place and we do not expect any significant interruption in the supply of our products”, it added in a statement.
Mark Todd, national officer of the Union of Shop, Distributive and Allied Workers (Usdaw), said the announcement was a “massive shock to our members and is an extremely distressing situation for all concerned, especially in the run up to Christmas.”
Companies House filings reveal that P&H’s losses nearly doubled between 2015 and 2016, rising from £8.4m to £16.4m, as operating profits were wiped out by the cost of servicing its debts – the company spent £36.6m on interest payments over the past two years on debts of more than £1bn.
This year’s accounts were due to be filed on on 7 October but are listed as overdue at Companies House.
P&H was unavailable for comment.
We’ll be posting updates as they occur on this website and will be providing a full analysis in the December issue of Wholesale News.