Future not so bright for discounter FreshXpress
Brendan Murtagh’s project goes into administration as competition heats up
Published 08/04/2008 | 00:00
FreshXpress, the discount supermarket chain born out of the Brendan Murtagh-backed purchase of troubled discount Kwik Save last summer, has gone into administration.
The Kingspan co-founder is understood to be behind a subsequent deal to purchase the nine operating stores remaining from what was once a 350-strong network.
Mr Murtagh, younger brother of Kingspan's chairman, Eugene, was the key figure behind a deal last July to rescue 56 Kwik Save stores as the remaining 90 outlets went into liquidation, at the expense of 1,100 jobs.
The supermarket group's woes have been brought about by the aggressive expansion of hard discounters, such as Denmark's Netto and Lidl and Aldi of Germany, in the UK over the past decade. This has led to a collapse in its sales in recent years.
The Cavanman, who had been involved in the business since he backed a £50m rescue plan in February 2007, reportedly took a 70pc holding FreskXpress and kept the Kwik Save managing director Paul Niklas on board, who received a 30pc stake.
Alan Murtagh, a son of the Irish businessman, was a director of the business even before his father bought it out of administration.
FreshXpress was initially expected to re-open all the stores under its name, saving 600 jobs, but decided to only rebrand 24 stores situated in the best locations.
It sold the rest of the chains in chunks to Tesco, Sainsburys, and The Co-op.
Recent months have seen a raft of underperforming FreshXpress stores being closed down and Mr Niklas cutting his ties with the company. He is understood to have sold his stake holding.
Menzies Corporate Restructuring was appointed as administrator of the company within the past few weeks.
At a hearing before the Manchester Crown Court, another special vehicle called FX Holdings -- also understood to be backed by Mr Murtagh -- was given the go-ahead to acquire the remaining operating outlets.
FX Holdings has brought in Andrew King, a former executive at the company's main supplier, Costcutter, in to head up the significantly slimmed-down business.
Joanne McGuinness, national officer with the Union of Shop, Distributive and Allied Workers (Usdaw) in Britain, said: "For the sake of our membership, we have to hope that the company (FX Holdings) will turn the remaining business around. We also hope that we might have more advanced notice if things start to deteriorate again."
There are some 130 people employed in the nine stores, Ms McGuinness said.
Timeline of the troubled Kwik Save supermarkets
UK supermarket giant Somerfield sells 171 of its 350 Kwik Save stores to a management buyout team headed by Paul Niklas and rebrands the remainder under the 'Somerfield' banner;
Kwik Save, having been built up to 250 stores, receives a £50m rescue package -- backed by Brendan Murtagh -- a major shareholder in Cavan-based Kingspan building materials group.
Following a spate of closures, the remaining 146 stores are shut and the company goes into administration.
Murtagh leads a deal to buy the 56 stores in an £18m deal as the other 90 stores go into liquidation.
24 stores rebranded as FreshXpress with the other 32 sold off in chunks to other retailers.
A raft of closures leaves FreshXpress with nine stores.
FreshXpress goes into administration; nine remaining stores acquired by FX Holdings.