UK’s Jessops tells investors stock value has turned worthless

Jessops, the UK's leading photographic retailer told its shareholders yesterday that their stock would be useless as the company plans to restructure its £61.7-million debt after posting a half-year loss of £13 million.

Jessops, which was floated by ABN Amro Capital in October 2004 and had a turnover of £250 million in 2008, said "Regrettably, against the backdrop of the challenging retail environment and the historic level of debt, the board believes that it is unlikely that any value will be attributed to shareholders."

However, David Adams the executive chairman of Jessops said, "I am confident there is a future for the business. We are saddled with the decisions of the past. There was a rush for space between 2004 and 2007 and the business got a bit dizzy and expanded too quickly without the proper infrastructure and incurred too much debt."

The photographic company, which has 211 stores in the UK and Ireland, was hit hard with the onset of the recession in the UK with consumers shopping for photographic equipment from cheap online retailers even as prices for cameras plunged.

Facing the prospect of being de-listed from the London Stock Exchange, Jessops said that it is talking to its banker, HSBC to restructure the £60 million debt facility, which may most likely result in the banker ending up becoming the majority shareholder of the company if a debt-for-equity swap is opted by the bank.

For the six months to 31 March, the company's total pre-tax loss rose to £13 million from £11.2 million the year before. In the same period, sales were down 4.5 per cent and revenues fell 8 per cent from £134.8 million to £124 million.

After having reduced its workforce from 375 to 125 in two years at its head office, the company warned that it may resort to further job cuts in a bid to cut costs and will be asking its staff to work part time.

As part of the cost cutting measures, the company had closed 21 stores in February.

The company, which went public in 2004, had to issue a profit warning within five months of being listed in the stock exchange and went on to issue three profit warnings in that year which ripped the company's value.

Since 2007, the company's shares have not traded above 10 pence over the past 12 months.