Allsports runs out of cash

The privately-owned sporting gear retailer Allsports has encountered cash flow problems due to tough high street conditions. The group, which operates 276 stores, ran out of cash and directors of the company gave up the fight after debts rose to £20 million. Half of that debt is a secured loan which founding chairman David Hughes bought from Barclays at face value. The balance is owed to suppliers.

Allsports ran into difficulties within an extraordinarily brief time span. The company generated a pre-tax profit of £3.9 million in 2004, with flat sales of £187.4 million. Joint administrator Dermot Power believes that the company's meteoric fall can be attributed to the difficult economic conditions of the past six months, the shifting tastes away from sportswear and the polarisation between value retailers and high fashion on the high street. Powers said that Allsports had not had enough money to refresh stock for the past three months. The rent bill, due this week, was the straw that broke the camel's back.

Powers will close the unprofitable stores and will trade the rest before selling the group. Mike Ashley, owner of Slazenger, Dunlop and Sports World, could be interested.