Jessops: Scale of financial horror revealed

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Jessops owed Canon and Nikon around £20 million when it collapsed last month, with assets of just £3.4 million available to preferential creditors, it has emerged.

Amateur Photographer (AP) can reveal the full scale of Jessops' financial troubles and the amount Jessops owed its key suppliers.

In total Jessops owed around £80m, including £42.6m to listed creditors.

Customers who had made deposits and not yet received goods, who returned goods and not received repayment – or who were due compensation – were owed £201,000.

Unredeemed customer gift cards totalled £869,000 and Jessops owed the taxman more than £1.3m.

The woeful figures are contained in records filed at Companies House, which have been seen by AP following a report published by This is Leicestershire earlier today.

The Notice of statement of affairs, submitted to Companies House by Jessops' administrators PwC, states that just £407,000 is available to unsecured creditors.

Canon (UK) Ltd was owed more than £16.4m and Nikon (UK) Ltd over £3.3m when administrators were called in on 9 January.

Major suppliers, including Canon and Nikon, had retention of title over unsold stock held by Jessops when it closed, meaning this should be returned to them as legal owners.

In Nikon's case, it seems most of the amount owed was held on a retention of title basis, according to the Companies House report.

Records show that Canon's security with Jessops, in terms of stock supplied, was £9.3m of the £16.4m it was owed.

Jessops owed Panasonic Marketing Europe nearly £4m; Sony UK Ltd around £3.2m; and Fujifilm (UK) Ltd about £2.6m.

Jessops' debt with Samsung amounted to £1.2m.

The collapsed chain owed its bank, HSBC, £28.7m and staff around £1.4m in wages.

Staff are treated as preferential creditors when a company falls into administration.

Customers who had signed up for Jessops Academy Courses, but not yet attended when the retailer shut its doors, were owed a total of £183,000.

Canon has so far declined to comment, and Nikon had yet to respond to a request for comment at the time of writing.
 
Yeah wow! Just wonder how many other retailers are in a similar boat. I guess some will get lucky and make it through and the rest we'll hear about. Not wanting to go off at a tangent but so many small local shops closed down because of big guys and now we're left with no specialists.
 
Yes incredible figures, surprising that all the creditors including the bank let it get so high, thought they would have called it in earlier.

Just shows what could be under the surface of the large retailers if you were to look at the financial statements.
 
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I wonder how financial mismanagement on such a huge scale is possible, simple budgeting seems to be a complete mystery to a lot of these large businesses. Did no-one have a clue as to what was happening. I don't know what the profit margins are on cameras but selling at a profit isn't exactly rocket science.
 
It seems analogous to the 'too big to fail' mentality of the banks, in some ways now supported by them.

There must be huge fears about these Zombie Companies and ramifications for the wider economy and financial institutions.
 
artyman said:
I wonder how financial mismanagement on such a huge scale is possible, simple budgeting seems to be a complete mystery to a lot of these large businesses. Did no-one have a clue as to what was happening. I don't know what the profit margins are on cameras but selling at a profit isn't exactly rocket science.
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I'm with you on this one Ken. Surely debts of this magnitude coupled with the fact that they were still actively trading up to the day they closed, would indicate that there has been a great deal of "dodgy dealings".:cautious:

As is always the case, and yet again, it's the small businesses and customers that are hit the hardest. Just looking at the figures quoted for gift tokens shows how active the company was :thumbsdown:.

I bet even the likes of Nikon and Canon winced when these figures were published!

Initially I felt very sorry to see such a famous, "family owned" business go to the wall but on reflection it would appear that they were very much the masters of their own demise. I would also go as far as to say that if foul play is the main reason for the company's' failings, then I hope that the main players are dealt with as harshly as is allowed. :bat:

Andy
 
For a large company £80 million is not a lot. It may sound a lot as a personal amount of money but it really isn't. I work for a very large company and things are looked at in billions.
The issues and losses could have been reversed if they had a good strategy for the company (moving to online only, beating all other online prices and using their well known brand name, only a few large headline stores in large cities that have same online prices but lots of stock to look at , get advice on etc,. etc,.)
 
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D James said:
Yes incredible figures, surprising that all the creditors including the bank let it get so high, thought they would have called it in earlier.

Just shows what could be under the surface of the large retailers if you were to look at the financial statements.
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Werent they actually owned by the bank after their last fall into admin? the stock situation makes the debts owed to camera companies much less than the headline figures aswell.

To me the biggest problem in the future seems to be the money owed to customers for gift cards, deposites and courses. If there going to be relaunched as an online business I think they'd do well to try and repay as much of this as possible of else the brand is going to suffer alot in consumers eyes.
 
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Welcome to the world of money. Real Tangible money is extremely lacking, its all a series of creating more money from pre-existing debts nowadays.
 
Somebody clever could tell us how big the number would have to be for it to tip into "trading while insolvent".

IIRC that means the directors have to personally stump up the shortfall.

BTW if I read that right, Nikon won't lose much money (since they own the product in the stores and can just repossess it). Canon not so much... It looks like their unsecured debt is double Jessops' entire assets.
 
JonathanRyan said:
Somebody clever could tell us how big the number would have to be for it to tip into "trading while insolvent".
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The legal definition is when the company is unable to pay its debts as they fall due.



JonathanRyan said:
IIRC that means the directors have to personally stump up the shortfall.
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To become liable the court would have to decide that the director was guilty of wrongful trading under S214 Insolvency Act 1986;

Wrongful trading.

(1)Subject to subsection (3) below, if in the course of the winding up of a company it appears that subsection (2) of this section applies in relation to a person who is or has been a director of the company, the court, on the application of the liquidator, may declare that that person is to be liable to make such contribution (if any) to the company’s assets as the court thinks proper.
(2)This subsection applies in relation to a person if—
(a)the company has gone into insolvent liquidation,
(b)at some time before the commencement of the winding up of the company, that person knew or ought to have concluded that there was no reasonable prospect that the company would avoid going into insolvent liquidation, and
(c)that person was a director of the company at that time;

The directors would be likely to try a defence under S214(3)

(3)The court shall not make a declaration under this section with respect to any person if it is satisfied that after the condition specified in subsection (2)(b) was first satisfied in relation to him that person took every step with a view to minimising the potential loss to the company’s creditors as (assuming him to have known that there was no reasonable prospect that the company would avoid going into insolvent liquidation) he ought to have taken.



It would suggest it is quite unlikely that the directors will be found liable, it isn't very common.
 
Thats not really a lot given the size of Jessops.

The "revelation" that the stock wasn't paid for and still the title of the manufacturers is pretty common practice in this type of retail business - which is the only way they could afford to have stock and almost certainly is how they operated for years and years.

The rest of the numbers add up to churn on their business quite easily across that number of outlets.

I suspect if you looked the PE ratio was always not amazing historically and it didn't take much of a blip to derail the whole train.
 
One thing that surprised me in the figures is the disparity of revenue between Canon and Nikon, and the fact it appears Jessops sold more Panasonic than Nikon as well (if all the figures are correct and cover the same time period).
 
Dave1 said:
One thing that surprised me in the figures is the disparity of revenue between Canon and Nikon, and the fact it appears Jessops sold more Panasonic than Nikon as well (if all the figures are correct and cover the same time period).
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Don't confuse stock holding with sales.....

For one thing it could eb that sales of one brand were so much higher that they had shorter credit terms. Or longer.

Lots of weird things go on in retail.

Just spotted the bit about owing staff £1.4M wages. That's the shameful bit.
 
JonathanRyan said:
Don't confuse stock holding with sales.....

For one thing it could eb that sales of one brand were so much higher that they had shorter credit terms. Or longer.

Lots of weird things go on in retail.

Just spotted the bit about owing staff £1.4M wages. That's the shameful bit.
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If its anything like happen to me a few years ago,they will see nothing :(
 
Dave1 said:
One thing that surprised me in the figures is the disparity of revenue between Canon and Nikon, and the fact it appears Jessops sold more Panasonic than Nikon as well (if all the figures are correct and cover the same time period).
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Iirc after the previous occasion jessops nearly went under ( and were only saved by a debt for equity swap) both Nikon and sigma offered far more stringent trading terms to them then canon. That's why they pushed canon much more.
 
JonathanRyan said:
Somebody clever could tell us how big the number would have to be for it to tip into "trading while insolvent".

IIRC that means the directors have to personally stump up the shortfall.

BTW if I read that right, Nikon won't lose much money (since they own the product in the stores and can just repossess it). Canon not so much... It looks like their unsecured debt is double Jessops' entire assets.
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The tipping point was when Jessops revealed the Xmas sales figures to their backers; They had previously had the support of the bankers and key suppliers, but when the dissapointing sales figures were revealed, that support fell away and the directors were left with no option but to appoint administrators. Becasue they had previously had the support of the bankers and key suppliers, it's unlikely that they would be considered trading whilst insovent.
 
JonathanRyan said:
Just spotted the bit about owing staff £1.4M wages. That's the shameful bit.
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For a company that size that's probably less than a week's worth of payroll. Unless the company goes into administration the same day as a payroll run, there will be a part of a month's accrued wages owing at the point of the administrator's appointment.
There may also be a significant wodge of deferred compensation for senior management in that figure.
 
JonathanRyan said:
Just spotted the bit about owing staff £1.4M wages. That's the shameful bit.
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I doubt that Jessops were not paying wages as they fell due. The £1.4m will be the wages earned in January up to the date the stores were closed, plus the redundancy and payment in lieu of notice that became payable when the stores were closed down. If the company can't pay, then then the Government will pay.
 
Got a marketing email off Jessops Photo today, were they part of Jessops that was sold off?
 
Is it John Lewis who are to pick up the reins and try to become the next out of town photo supplier for the masses? Expanding company, good reputation, excellent refund policy? Box shifting to the plebes can be done by the supermarkets and Argos et al, but for customers who require the personal touch? Already signs of them picking up electrical sales from the Comet closure.
Just thinkin like :thinking:
 
John Lewis customer service is great, the prices aren't too bad on a lot of the products but the expertise at hand is still lacking if you want to really quiz them about the different cameras. You still need to do your research first but at least you can then try the cameras on you shortlist (as long as they are compacts of some sort - their SLR range is limited)
 
I can't speak about their photographic side, but we bought a TV from John Lewis late last year. I would never have normally thought about them when doing searches but they seemed popular on one of the AV forums. They provided excellent customer service, delivered when they said they would and (although I didn't need it in the end) they do price matching plus some of their products come with extra warranty free of charge. I would definitely use them again.
 
ernesto said:
John Lewis customer service is great, the prices aren't too bad on a lot of the products but the expertise at hand is still lacking if you want to really quiz them about the different cameras. You still need to do your research first but at least you can then try the cameras on you shortlist (as long as they are compacts of some sort - their SLR range is limited)
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Actually I was pleasantly surprised when I was in JL yesterday. The full Nikon dSLR range (bar D4) was there laid out for anyone to hold play and try. And not just that, nearly the full lens lineup as well. As far as I know canon (which is little) the same story seems to be there. Never seen so many camera models and lenses on display ready to handle in one place.
 
I bought a manfrotto tripod from JL in the new year sales (had a £100 voucher). Sales guy was really helpful, but totally clueless (didn't understand the difference between a flimsy £30 Velbon and £150 Manfrotto).
 
spacester said:
I bought a manfrotto tripod from JL in the new year sales (had a £100 voucher). Sales guy was really helpful, but totally clueless (didn't understand the difference between a flimsy £30 Velbon and £150 Manfrotto).
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Is there any difference other than £120 :devil:
 
We'll see the few remaining independents [WEx, Park etc] becoming the dominant forces. Decent online revenue, single site shops. Distance selling from a warehouse? That'll be just like Jessops used to be before the gold rush.

Fortunately, WEx is my local shop anyway, but for those town with no remaining service it'll mean a longer trip to hands-on gear than before.
 
I think my nearest camera shop is probably York, now, which means a £25 petrol round trip just to get into the store. That store, however, seems like daylight robbery when you walk in having done preliminary research on t'intarwebs.

Mind you, blagging staff (rather than saying they don't know, making stuff up and trying to sound authoritative) doesn't help one jot, either. :|
 
I bought a couple of memory cards through Groupon supplied from Jessops, just after xmas, happy to say that after a couple of emails, and phone calls, items received, all ended ok for me.
 
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