RAPID decline and fall; HOW A CITY CENTRE INSTITUTION COLLAPSED OWING MORE THAN PS1M TO CUSTOMERS AND CREDITORS.
BUILDING works and a lack of car parking helped push hardware store Rapid Discount Outlet out of business, a new report has revealed. And Rapid customers are still owed thousands of pounds after the famous Liverpool store collapsed.
The shop in Williamson Square, went into administration in May after a poor Easter and closed weeks later, owing more than PS1m.
The new report from administrators Duff & Phelps, filed at Companies House, lays bare what happened to Rapid in its last months.
It says that Rapid struggled for many reasons, including competition from online retailers and "major council building works" that limited access to the store.
Rapid Discount Outlet was formed in 2013 after previous business Rapid Hardware collapsed.
Rapid Hardware was founded in 1971 and grew to an PS18m business in Renshaw Street. It moved to the old George Henry Lee building in 2009.
After its collapse, it reopened as Rapid Discount Outlet in May 2013 with 50 staff.
But it lost money in all three years of trading. In its final year, annual sales fell from PS4.8m to PS3.6m, with losses increasing from PS30,000 to PS169,000.
According to the Duff & Phelps report, Rapid's directors said the losses were caused by: | Worsening economic conditions in the market as a whole.
| Reduced gross profit margins. | Major council building works limiting access to the store and the resulting loss of footfall.
The works are not named but may refer to the building work to replace the steps at Clayton Square.
The report adds: "Whilst an iconic store within Liverpool, the company traded from premises with no car parking facilities, which meant some customers were put off making larger purchases."
The original store in Renshaw Street had street parking outside, something never matched by the new store in Williamson Square.
And Duff & Phelps says that the company had also struggled to compete with online rivals.
The report adds: "Due to the company's high operating costs and low margins the company was unable to match the online prices on offer."
The fall in sales caused a strain on cashflow. The directors tried to negotiate with suppliers and met council officials to see if their rates bills could be cut.
Bosses were optimistic that they could trade through the "difficult period", even though losses for the first three months of the year stood at PS85,000.
But when Easter turnover was lower than expected, they called in Duff & Phelps for advice.
They decided there was no prospect of raising any more cash and that the company was no longer able to pay its debts, and so Philip Duffy and Sarah Bell of Duff & Phelps were appointed as administrators.
They tried to sell Rapid Discount Outlet by promoting it to retailers, financiers, lawyers and business advisers. But the report says that the administrators "did not receive any interest in the business as a going concern".
Meanwhile, they kept the store open to sell the remaining stock. On May 10, 28 staff, including the company's three directors, were made redundant.
The store finally closed on May 30. The report says Rapid Discount Outlet owed more than PS1.1m.
Of that money, PS601,000 was due to trade creditors, while HM Revenue and Customs was owed PS262,000 and sister firm Rapid Property Investments was owed PS154,000. The Duff & Phelps report says Rapid had taken PS41,940 from customers who had placed orders for future delivery or collection. Most of that cash was for deposits rather than payment in full.
The report says: "Due to the company's financial position, the joint administrators were unable to refund these monies."
And any customers still owed money now need to send "proof of debt" forms to the administrators.
But the report warns that it is unlikely that any of the creditors, from customer to the taxman, will get all their money back.
Once Rapid's doors finally closed, the administrators had to get rid of what was left in the shop.
Liverpool cash-and-carry firm Saka Ltd bought the remaining stock for PS4,000 plus VAT. Saka also agreed "to clear the store of residual waste and broom sweep, leaving the store clean and tidy."
After the cafe closed, PTC Wigan bought the kitchen equipment for PS2,800 plus VAT.
North Liverpool firm Worldwide Furniture Source bought "a selection of furniture held in the warehouse" for PS560 plus VAT.
Meanwhile, Duff & Phelps said the stock in the warehouse "had been stored for a number of years and was predominantly low value with a high cost of sale and removal". It was sold to Accrington-based Right Deals UK for PS1,500 plus VAT.
Investigations into Rapid's affairs are ongoing.
The final sale at hardware store Rapid Discount Outlet meant the loss of a city retail institution
Disruption from the work on Clayton Square steps could have been a factor