There was sad news for the UK high street yesterday as Clinton Cards was put into administration by its largest supplier.
The familiar card shop with over 8,000 staff and over 750 stores had recently seen its bank debt bought up by American Greetings, the second largest player in the world greeting card market after Hallmark.
When it became clear that Clinton would be unable to meet the repayment demands issued by the major US firm, moves to put the UK retailer into administration began.
Over the past few months speculation over the future of Clinton Cards had been growing. The retailer had seen its losses balloon to £130 million since 2004.
There seems to have been a variety of factors which have contributed to the company’s difficulties including: large rent bills, competition from websites offering personalised cards and people sending birthday messages over Facebook.
Clinton Cards was founded in 1968 by East London entrepreneur Don Lewin who quickly built up the business before floating it in the London stock exchange in 1988.
During the 90′s the company embarked on an aggressive expansion strategy; the acquired over 400 shops during this period from several competitors including Hallmark Cards, Carlton Cards and GSG Holdings limited.
Recently Clinton had been pursuing a cost cutting policy including the closure of a number of stores. However, it looks like this process hasn’t had enough of an effect meaning that Clinton was unable to meet some of its bank debt repayments. At this point American Greetings, Clinton’s largest supplier and non-bank creditor stepped in to buy up the debt.
The bank debt was around £35 million and Clinton already owed American Greetings over £15 million meaning the UK firm are in debt to the Americans to the tune of over £50 million.
There has been speculation that the buying up of the debt and the move to put Clintons into administration could be precursors to a takeover by the American firm.
It is likely that the administrators will embark on an aggressive cost cutting program including significant redundancies and the closure of many of the underperforming stores. This would likely leave the company in a much healthier state.
With American Greetings being by far the largest creditor and owning such a high proportion of Clinton’s debts, they would be in an extremely strong negotiation position if they made a move to take control of the UK chain.
It’s certainly worrying times for employees of the firm, I wonder how many of them will be receiving sympathy cards from family and friends?
Can you see light at the end of the tunnel for Clinton Cards? Would a takeover by American Greetings be the best way forward? Let us know your thoughts in the comments box below and feel free to leave messages of support.