Caldeira considers restructuring plan

LIVERPOOL home textiles group Caldeira is considering staff cuts and shop closures in response to losses at its Chinese operation and weak consumer demand.

But managing director Tony Caldeira said management had so far focused on renegotiating leases and landlords had been supportive.

The group’s newly-filed accounts show the directors have drawn up a series of options which include: improving margins through overseas sourcing, cutting staff and other costs, closing some of its 14 Fabric Warehouse shops and renegotiating leases, and selling property in China.

This was in response to forecasts that show the company will operate within its current banking facilities, but the “headroom is small, leaving the group vulnerable to downside risk”.

In the year to the end of December 2011 group turnover fell 21% to £16.5m. Pre-tax losses widened from £165,000 last time to £2.1m.

This was largely down to a £1.4m loss at the Chinese operation, known as Zhejiang Haosheng Textile Co where the general manager has left, and an equity partner has pulled out.

In the accounts the group says the UK manufacturing arm of the business has continued to provide it with “a strong competitive advantage” but it is facing a “backdrop of a very challenging economic environment with soft furnishings retail under severe pressure in the UK”.

The directors warn the company could breach the terms of its current banking facility which is up for renewal in September. They admit the problems detailed in the accounts indicate a material uncertainty which may cast doubt on the firm’s ability to operate as a going concern.

But they add: “The directors are in regular discussions with the group’s banks and are confident that existing facilities will be renewed on acceptable terms.”

Caldeira, which is owned by Mr Caldeira, employed 255 staff during the year, down from 426 in 2010. In a statement he said: “In terms of a turnaround plan there has been a restructuring process taking place across the business with specific actions taking place in the four main companies within the group.
 
“At The Fabric Warehouse, as well as fixed cost reductions and better product sourcing, negotiations are taking place with landlords to help the company reduce its property costs. Most of the landlords involved have been very supportive and have taken a realistic, common sense approach to the discussions.
 
“At Caldeira China, a new management team has been installed in the business including a new general manager, operations manager and chief accountant and the new team are making great progress helping the business recover from the issues caused by the former business partner. Both Caldeira UK and USA remain profitable.”