Woolworths' confectionery suppliers up in air after chain's plunge into administration

- Last updated on GMT

Related tags: Insurance, Easter

A cloud of uncertainty loomed over suppliers to Woolworths, as administrators continued their efforts to try to rescue the chain.An industry source...

A cloud of uncertainty loomed over suppliers to Woolworths, as administrators continued their efforts to try to rescue the chain.

An industry source said that Woolworths traditionally put Easter eggs on sale in January, many of which are produced in the far east. "They will be already manufactured and on the water in big container ships," he said. "The Easter eggs will be docking in the next three to four weeks."

The total sales of Easter eggs sold through its stores are worth around £20-30M, estimated Clive Beecham md of Kinnerton, which produces confectionery in the UK. He said that Kinnerton had been forced to put a halt to its production of Easter eggs which are supplied to the retailer.

"Woolworths had placed orders [with us] and production was just underway, with artwork signed off. We can't bank on any orders, so it is prudent to halt production until it is clear what is happening," added Beecham.

Woolworths has 815 stores and 30,000 employees nationwide. In October insurance companies decided to withdraw cover offered to suppliers, which insured them against the risk that the retailer would not be able to pay for stock. As a result, Woolworths was forced to pay many suppliers up front in cash, increasing the size of its debt to £385M.

"The collapse of Woolworths is a sign of the times," said one financial analyst. "Pick n' mix, for example, is an outdated concept."

If selling confectionery in this way had really been a successful money-spinner then the likes of Tesco and Asda would have offered it in all of their shops, he continued.

"Confectioners supplying Woolworths probably realised this a long time ago and stepped up their packaged offerings in the supermarkets," he added.

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