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Some 28,000 Woolworths staff are set to join the growing ranks of Britain's unemployed after being told yesterday that all stores are to close by early January.
Talks with potential buyers of the stricken chain continue, but administrators Deloitte told the group's remaining 28,275 employees yesterday to prepare themselves for the worst.
Workers had learned the news in an email from head office yesterday morning. The first 200 of the group's 807 stores will close on 27 December, followed by subsequent waves on 30 December and 2 January. The final stores will open their doors to the public for the last time on 5 January, ending nearly a century's trading at the high-street institution.
"Some people have worked at Woolworths for 10, 20 years and it really means something to them," said one head office worker, who said colleagues had cried when the decision was announced. "Woolworths has been around for 99 years so it is almost a heritage brand."
Last-minute bids for the chain were said to be in the offing from groups in the UK and overseas, but hopes of a deal being struck look forlorn.
Administrator Neville Kahn, a partner at Deloitte, conceded that it looked as if the brand would disappear from the high street: "Quite a few people have looked at the business and decided not to proceed."
He said buyers were finding it difficult to secure financial backing because of the credit crunch. In any case, potential buyers only want to take on a fraction of the stores, meaning any sale would still result in thousands of job losses.
Deloitte was appointed as administrator to Woolworths' retail business and distribution arm EUK, which supplies CDs to Zavvi and supermarkets,last month after the management failed to agree new financing terms with its banking syndicate.
It has already made 1,200 staff redundant as operations were trimmed behind the scenes at its head office and the EUK warehouses.
The government yesterday distanced itself from intervening in the group's plight. "We are disappointed that the administrators have been unable to find a buyer," said a Downing Street spokesman.
A break-up now looks inevitable, with 300 stores already pledged to rival groups including frozen food chain Iceland and discounters such as Wilkinson.
If buyers are not found for the remaining 500 stores, the keys will be handed back to landlords in the new year. However, the government may have to pick up the bill for the collapsed group's pensioners. The Pension Protection Fund is in talks with the company about taking the scheme, which has an estimated £100m deficit, under its wing.
Administrators said the store staff are entitled to statutory redundancy terms which means a week's pay for each year of service. The retail chain has 27,000 staff while another 1,275 are employed by EUK as well as in its warehouses and head office. However, as last-ditch talks continue, the administrators stressed staff had not yet been put on notice.
The main beneficiaries of Woolworths' demise have been cash-strapped shoppers who have flocked to its stores to buy cut-price toys and CDs for Christmas. Such has been the frenzy that last Thursday was a record trading day for the retailer. It has used tactical promotions to pull in shoppers and expects to be the biggest seller of X Factor winner Alexandra Burke's Christmas single, a version of Leonard Cohen's Hallelujah, after undercutting the rest of the high street.
Store shelves will be restocked with 50m new items this week, but as warehouses empty, "closing down sale" hoardings will soon replace Christmas banners in the shop windows.
Some staff will have the depressing task of working on after the official closing date of January 5, readying the stores for their new owners - or, as looks likely, preparing them to lie empty if the high street downturn means no new tenant can be found.
Parent company Woolworths, which is quoted on the stock exchange, owes banks close to £400m, and as secured creditors they are first in line to get their money back. Woolworths suppliers will not be so lucky. It emerged yesterday the collapsed group owes 500 companies tens of millions of pounds. They stand to receive only a fraction of what they are owed, with Deloitte warning it would take several months to tot up the amount available to return to them.
Although Woolworths is unlikely to survive in its current form, there was hope that the brand could retain a presence on the high street. "I think Woolworths will come back on to the high street," said Kahn. "Whether it is in early 2009 is uncertain, but I'm confident it will reappear."
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