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Dragon's Den entrepreneur Theo Paphitis will today resume talks to buy Woolworths from administrators Deloitte amid concerns that a bid will fail to materialise and the retail chain will be broken up with the loss of thousands of jobs.
Paphitis, who has made £100m rescuing high street retailers, is one of 10 "serious" potential bidders for Woolworths who met Deloitte on Friday and have scheduled face-to-face talks this week to follow inquiries to buy all or most of its businesses.
Paphitis is known to be interested in buying all 815 stores, keeping the Woolworths name and most of the outlets but hiving off some to rivals.
Woolworths' wholesale DVD and CD supply business is understood to be the target of several other would-be bidders.
Property magnate Ardeshir Naghshineh, who owns 10% of the retailer, is understood to be keen for the business to be restructured along the lines of John Lewis, with employees as majority owners.
Naghshineh said last week he was "deeply disappointed" that the company had gone into administration. Like Paphitis, he outlined a plan that would see Woolworths sell leases to bring in cash.
Unions remained fearful that the deepening recession and falling retail sales would deter bids for the whole group, leaving many of its 30,000 employees with the prospect of losing their jobs.
Statements from Alistair Darling at the weekend that the economy would need a further injection of government spending or tax cuts to avoid a slump appeared to support evidence that efforts to date had failed to boost high street spending.
Darling said measures set out in the pre-budget report, including a 2.5-percentage-point cut in VAT that takes effect today, were unlikely to be enough to persuade consumers that they could shop without fearing for their jobs or a clampdown by their bank on lending.
He said the government was working to ease lending by banks ahead of any further direct government efforts to lift the economy.
Experian, the credit reference agency, said discounting by shops had failed to boost sales. It said its retail footfall index dropped 0.9% in the year to November.
The number of shops going into administration rose by 21% in November, including Woolworths and MFI, and many other high street names were expected to go bust after the Christmas period. Experian said another indication of customer sentiment was a 133% increase in the number of searches over the internet for discount vouchers in the past 12 months.
Figures from John Lewis yesterday pointed to a brighter Christmas as it reported a 10% sales lift last week on the week before as shoppers began to stock up on gifts for the festive season. That was still 13% lower than the same week last year, however.
The department store group, which has suffered an unusually sharp fall in sales in the second half of the year, said strong sales of toys, craft products, fashion items and beauty products were compensating for a fall-off in furniture, carpets and other items associated with moving home.
John Lewis is likely to face stiff competition from Marks & Spencer, Debenhams and other retailers that have seen a steep drop in sales over recent weeks. M&S has already signalled its intention to fight for customers with a one-day sale that knocked 20% of standard prices.
Debenhams is understood to be planning similar discounts to get its tills ringing over Christmas, though retail analysts expect most shoppers to stick to bargain-hunting and most remain gloomy about the prospects for the next six months.
Tesco is considered a safe bet to ride out the downturn but it is expected to report its worst sales performance since 1992 when it reports third-quarter results tomorrow. The supermarket group, which employs 440,000 people at 4,000 stores in 14 countries, will concede that like-for-like sales growth slowed to 1.9%. It has been squeezed between rejuvenated rivals Sainsbury's, Asda and Morrisons, and discounters Lidl, Netto and Aldi.
Morrisons is expected to report like-for-like sales growth of 7.2% on Thursday.
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