UK wholesaler Palmer & Harvey has collapsed into administration, leading to 2,500 immediate job losses in the month before Christmas.
The company, which supplies around 90,000 supermarkets and convenience stores across the country, has been hit by 'challenging trading conditions' in recent months, and efforts to restructure the business have been unsuccessful.
Administrators PwC added that this has resulted in cash-flow pressures, and it has not been possible to secure additional funding to support the business.
"The company has insufficient cash resources to continue to trade beyond the short term, and the directors have concluded that there is no longer any reasonable prospect of a sale," said Matthew Callaghan, join administrator and PwC partner. "This is a devastating blow for everyone who has been involved in the business."
Palmer & Harvey operates a delivery network of 14 regional distribution centres and supplies up to 12,000 product lines.
The company employed around 3,400 employees, of which 2,500 have now been made redundant. The remaining staff will assist in managing the activity of the business to an orderly closure.
"The administration team will focus on working with employees, clients and suppliers to facilitate a smooth and effective wind-down or transfer of operations over the next few weeks," added Callaghan.
Wholesale Market
This closure comes at a time of significant change in the UK wholesale industry.
Booker, Palmer & Harvey's competitor, is set to be taken over by supermarket giant Tesco, after the deal was provisionally cleared by the UK's Competition & Markets Authority (CMA) last week. However, last month, a number of UK wholesale companies expressed concern over the £3.7 billion merger, saying that the increased buying power would make it very challenging for other wholesalers to compete.
There was also a concern that once the companies had merged, Tesco/Booker would become the 'preferential customer for suppliers', meaning that it would have preferential access to seasonal or limited stock.
The CMA's final decision is expected to be published in December.
© 2017 European Supermarket Magazine – your source for the latest retail news. Article by Sarah Harford. Click subscribe to sign up to ESM: The European Supermarket Magazine.
