OPINION: Jessops: Over exposed to a negative picture
In the cold light of day, the sudden collapse and closure of Jessops last week was not much of a surprise, writes Business Editor Ian Griffin.
In fact, it was more of a surprise that the Leicester-based camera chain had lasted as long as it did.
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A Jessops store
The company, founded in the city in 1935, was effectively bust three years ago but was kept alive after HSBC wrote off £34 million of loans in exchange for a 47 per cent stake in the business.
It had been on a downward spiral since its flotation on the London Stock Exchange in 2004, when an over-estimation of the public's interest in digital photography and an under-estimation of competition from the internet and larger retailers led to a slump in profits.
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However, HSBC saw a way of getting back its investment by steadily reviving the business while awaiting an upturn on the high street. Neither happened.
Jessops' relationship with Japanese camera manufacturers Canon and Nikon deteriorated after last year's departure of retail veteran and chairman David Adams and chief executive Trevor Moore, a retail turnaround specialist.
Their replacement, Martyn Everett, former deputy finance director of house-builder Taylor Wimpey, reportedly annoyed the two major brands after taking a tougher line over the supply of products.
Canon and Nikon tightened their terms in the run-up Christmas, which left the retailer starved of cash.
Reports say Jessops needed a cash injection of between £5 million and £10 million to survive this year.
However, talks between Mr Everett, HSBC and suppliers proved fruitless and the company was forced to call in administrators last Wednesday. The fact PricewaterhouseCoopers decided the business had no viable future just two days later and closed all 187 stores with the loss of about 1,500 jobs highlights the dire situation Jessops was in and the fact it had effectively been propped up by HSBC.
Rumours of a possible partial buyout of the collapsed business have so far come to nothing. Mr Adams, who left the business last February, said on Thursday he had fronted a private equity bid for the business last summer which had been rejected by HSBC.
Whether he revives his interest remains to be seen.
Some analysts have suggested the Jessops name could live on through a much smaller presence on the high street, offering equipment and services to professional and semi-professional photographers. Others think it will now become an internet-only brand.
Whatever happens, the past week has seen a much-loved 78-year-old retailer brought to a rather undignified end.
It was not the lasting image founder Frank Jessop would have wanted when he opened up his first store in Newarke Street, Leicester, all those years ago.
Comments
by TomCAylestone
Tuesday, January 15 2013, 11:04AM
“It's sad to see both Jacobs and now Jessops go, but the sad fact is that at the point and snap end of the market, the large supermarkets have been under cutting them for years, and in the serious hobbyist, semi-professional and professional areas, the on-line retailers offer greater choice at significantly cheaper prices.
I did pay the premium a couple of years ago (with Jacobs) to have access to what I thought would be better support, but when I needed that support I found that they knew less about the equipment than I did (i.e. I'd read the manuals & they hadn't even done that). So this year when I upgraded, I did my research on the internet & then bought from a reputable on-line retailer.”