MORE than 400 jobs are at risk after a struggling North East bakery went into administration yesterday.
Durham-based family business Peters Cathedral Bakers has a turnover of more than £12m on the back of a network of 58 Peters Bakers stores across the north of England and 403 staff.
But the challenging environment on the high street, coupled with rising commodity and energy prices, has led to the collapse of the 46-year-old business.
The firm has appointed Mark Firmin and Howard Smith of KPMG as joint administrators.
Firmin said: “The challenging retail environment on the high street is exacerbated by rising commodity and energy prices squeezing margins in this sector.
“These factors, along with reduced volumes with its wholesale customers, has led to the failure of this 46 year old family business.
“We will continue to trade the bakery – which has a state-of-the-art production facility, a 100-strong product range and a loyal workforce – while seeking a buyer and will be assessing and reviewing all aspects of the business.”
He also said a number of redundancies are anticipated and will be confirmed in the coming days.
It’s not the first time the company has had to fight its way back from the threat of permanent closure.
The company’s plant at the Dragonville Estate in Durham was gutted by a huge fire in May 2004 which left plumes of smoke visible from 12 miles away.
Hundreds of workers had feared for their jobs in the immediate aftermath of the blaze as all of the company’s 71 shops had to be closed.
But within less than a month the company had transformed the old Hibernia Foods Factory in Peterlee to a temporary bakery and the business started to bounce back.
It managed to regain 97% of its original £13m turnover and the company even won a 2004 Baking Industry Award, the industry’s equivalent of an Oscar.
The Dragonville bakery was then rebuilt and re-equipped at a cost of about £9m in September 2005 and now boasts a 50,000 square foot factory full of modern equipment as the result of a total refit.
The news is a further blow to the North East’s high streets, where recent months have seen the closure of Clinton Cards, Peacocks and Pilot. But the companies are not alone, according to PricewaterhouseCoopers – in 2011, 183 retailers fell into administration compared with 165 in 2010.
Shop vacancy rates have hit a record high of almost 15%, up from 4% in 2007.
The store foundered while its huge Newcastle-based rival Greggs is still celebrating its successful campaign to force the Government to make a U-turn in plans for a pasty tax.
The company this year reported record sales for 2011 and unveiled plans to create around 800 jobs nationwide by adding 90 more stores to its 1,571-strong portfolio.
We will continue to trade the bakery, which has a state-of-the-art facility, while seeking a buyer