Hundreds out of a job at Woolies' head office

By Simon English for MailOnline
Updated: 08:48 EDT, 5 December 2008

Hundreds of staff at Woolworths' head office in Marylebone Road, London, are being axed as the once-iconic pick 'n' mix store chain is wound down.

Woolies: Staff now look cetain to lose their jobs

They have been leaving all week, with many more expected to be given the bad news today, receiving redundancy cheques of just £385 for each year of service.

Although administrator Deloitte insists that offers to buy the business are still on the table, hopes that a deal could be concluded before Christmas faded yesterday when Dragons' Den entrepreneur Theo Paphitis walked away from a rescue.

He is said to be bitterly disappointed that his bid was refused.

Neville Kahn at Deloitte said: 'Unfortunately, it has been necessary to make some 450 employees redundant out of a total workforce of over 25,000. These roles are in head office and support functions in London and Castleton.

'There have been no redundancies in the High Street stores and distribution centres. Our expectation remains that stores will remain open beyond Christmas and that all staff in the stores will be paid in full.'

One possibility is that the most lucrative of the 813 stores are sold off to supermarkets, who will turn them into convenience outlets, increasing their dominance of the retail industry.

Woolies today launched a last-ditch sale, halving the price on items such as toys and greetings cards.

Deloitte denied this was an attempt to clear the shelves before the firm is formally liquidated. It claims there is 'strong interest' in the leases.

Paphitis wanted to retain the Woolworths brand name and rejig the offering in the shops. This would have provided 'a secure future for as many employees as possible', he said yesterday. The knock-on effect from the collapse of Woolies continues.

Rival retailers expect to see sales fall as customers from Woolworths grab Christmas items at cheap rates. The chain is also a leading supplier of CDs and DVDs to supermarkets and other music retailers such as Zavvi via its distribution arm Entertainment UK.

The Financial Times today said Zavvi had been left without a batch of Christmas best-sellers, forcing it to buy stock at short notice from other suppliers. Woolworths went into administration on 26 November with debts of £385m. The 2 entertain joint venture with BBC Worldwide continues to operate as normal.

Meanwhile, Woolworths' creditors are scrambling to get cash from the retailer.

Some suppliers of toys are said to be owed more than £1m by the company, suggesting they continued to fill the stores with goods even after it was clear that Woolies was in trouble.

Character Group, which supplies Scooby-Doo, Doctor Who and Peppa Pig toys, intends to grab some of its stock back, although it may not be successful. Mattel, the world's largest toymaker, stopped delivering to the store chain in September.

Woolworths has been a part of UK life since 1909 when Frank Woolworth set up the first British store in Liverpool. It was incredibly popular for many years, but critics say it failed to move with the times.