The future of 76-year-old discount retailer Ethel Austin is once more under threat after the group called in administrators for the second time in two years.
Ethel Austin, which has its HQ in Liverpool and a network of nearly 300 stores, and its sister homewares chain Au Naturale appointed MCR as administrator after the business failed to turn around following its rescue from collapse in May 2008.
Hundreds of jobs now hang in the balance as MCR seeks to find a buyer.
The administrator said it could not rule out store closures and redundancies as it goes through the embattled retailer’s books.
Ethel Austin, based at Knowsley, Merseyside, only 10 miles from where the business was founded by Ethel Austin and her husband George Austin in their Liverpool council house in 1934, was bought out of administration in 2008 by Elaine McPherson, the previous chief executive and joint owner of MK One.
She pledged to return Ethel Austin to its “former glory” with an overhaul of the stores and clothing range.
The move helped protect 2,500 jobs at the time, although more than 450 jobs and 33 stores were earlier axed by administrators.
But the group has come under pressure from rival budget chains such as Primark and Matalan, while the financial crisis affected its financing plans.
MCR today said the recent funding woes were compounded by adverse weather at the height of the key January sales period.
Geoff Bouchier, partner at MCR, said: “There is no doubt in our mind that the onset of the global economic crisis has hit the retail sector particularly hard. As a consequence of this the companies have struggled to secure funds, which in turn has impacted their ability to generate sales revenue.
“This has been compounded by poor trading conditions in January attributed to the adverse weather conditions, which severely restricted the companies’ cash flow.”
Ms McPherson headed budget chain MK One until its sale to Icelandic owner Baugur in 2004 for £55 million - but MK One faced similar difficulties to Ethel Austin in more recent years, collapsing into administration twice in 2008.
Mr Bouchier said Ethel Austin would trade as normal while a buyer was sought, but added that “in the current economic climate there are no guarantees that purchasers will be found”.
There are 3,714 staff employed across Ethel Austin and Au Naturale, including 400 head office staff.