Fears over future of First Quench

The owner of the Threshers off-licence chain has issued a “going concern” warning, casting doubt over the future of the business.

First Quench Group, the private equity-backed operator of 1,400 Threshers, The Local and Wine Rack outlets, is suffering the consequences of a tough trading environment and the refusal of credit insurers to provide cover for some of its suppliers – a story broken by the drinks business in February.

The pressure this has put on the group’s working capital, coupled with the increased costs of operating on the high street and competition from the multiples has led to growing concerns over the sustainability of the business.

First Quench said: “The combination of these circumstances represent a material uncertainty that casts significant doubt upon the group’s ability to continue as a going concern.”

The group, which posted a pre-tax loss of £30million for the last year, has already closed 162 stores and plans to shut a further 400 in a bid to purge the group of loss-making outlets. 48 head office staff were also axed in March.

A spokeswoman for First Quench said: “Cashflow reductions and credit lines have been withdrawn in our sector because of the economic downturn.”

Alan Lodge, 10.06.2009