A UK supermarket chain could close stores (file pic) (Image: Getty)
A UK supermarket chain could close as many as 300 stores, as the business is at risk of collapse. Now the crisis-hit retailer is racing against time to secure a rescue merger, as fears mount it could go bust.
Southern Co-op has warned members it faces collapse into administration after three consecutive years of financial losses. The regional chain, which operates more than 300 food stores, funeral homes and coffee shops across southern England, says merging with Co-op Group represents its only chance of survival. Thousands of retail workers now face an uncertain future as the company hangs on the edge of collapse. Company chiefs wrote to members on April 22, laying bare the scale of the crisis. Members will vote on the proposed merger at crunch meetings on May 6 and May 21 – a decision that will ultimately decide whether the business survives.
A Southern Co-op ‘Welcome’ store in London (Image: Google)
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Chief executive Ben Stimson and chair Janet Paraskeva issued the stark warning to give members the “full picture” of the firm’s rapidly worsening finances.
The company expects operating losses to top £20million in the coming financial year.
Attempts to slash costs – including a recruitment freeze and downsizing office space – have failed to halt the decline.
Banks and suppliers have kept the company afloat as conditions worsened over the past year, but bosses admitted “that support cannot now be increased within the time available.”
No alternative funding lifeline has emerged to keep Southern Co-op going as an independent business.
A cyberattack last year also piled further pressure onto the struggling operation.
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Bosses did not mince their words about the consequences if members reject the deal.
“If the merger does not go ahead, the most likely outcome is that Southern Co-op will enter insolvency through administration,” they warned.
An external administrator would then be brought in to offload the remaining assets.
The fallout would be devastating – with jobs on the line, stores forced to shut and suppliers facing heavy losses.
“Southern Co-op has made losses for the past three years,” the letter acknowledged, adding that “over the last year, trading has become more difficult, and we have relied on ongoing support from our banks and suppliers to continue operating.”
Despite a long-standing desire to remain independent, leaders conceded there is no viable alternative.
If approved, the merger would create a retail giant with combined sales of around £11.5billion and nearly 2,500 stores nationwide.
The board insists the deal would bring “immediate financial stability” while protecting stores and safeguarding thousands of jobs.
“It is not an easy decision, but it is the one that protects more jobs, more services, and more value for members than any other option available to us today,” bosses said.
The company is now urging members to back the takeover when they meet for the decisive votes in May.