Nearly 80 employees have been made redundant following the collapse of East Yorkshire electronics retailer Ebuyer, potentially leaving creditors short of nearly £30m.
Administrators for the laptop and computer retailer revealed that 79 staff members from the Howden Dyke-based firm lost their jobs, while 48 have been transferred to Frasers Group, which acquired the business with a turnover of £136m for a mere £2.06m.
Newly released documents detailing the downfall of the prominent employer indicate it experienced a significant slowdown in its market, along with reduced support from its creditors. Owners Mark Reed and Rich Marsden, who purchased Ebuyer just two years ago in a £26m deal, attempted to revive the business but were rebuffed by investors when they sought additional funds.
A report from joint administrators at specialist insolvency firm FRP reveals a variety of offers were made for the established company, one as low as £1. Amid an estimated £1.7m owed to HMRC and larger sums due to distributors, the company was compelled to enter administration.
In its report, FRP stated: "The company was initially impacted by a combination of factors, including a 20% year-on-year market contraction, post-Covid demand softness, broader macroeconomic headwinds, and a sector-wide tightening of creditor support throughout 2023-2024. Despite generating £136.5m in revenue for the year ending December 31, 2023, the company recorded a net loss of £1.7m, reflecting wider challenges across the retail and technology sectors.
"The withdrawal of credit insurance across the sector further constrained working capital flexibility, leading to increased cost of goods sold and compressed gross margins, resulting in an Ebitda (earnings before interest, taxes, depreciation and amortisation) loss of £4m in 2024. With approximately 90% of sales dependent on distributor supply, the company's limited access to direct stock restricted its ability to secure higher margin products and scale its owned brand ranges, including Xenta and Alphasync.", reports .
FRP stated that management had attempted to stabilise the firm and recover margins by expanding their product offering. However, the plan required funding and it was deemed unlikely that third-party investment would be forthcoming due to Ebuyer's precarious financial situation.
The administrators further noted: "The company subsequently approached its existing investors to assess their willingness to inject further capital. However, following discussions, the investors confirmed they were not prepared to provide additional funding in the company's current state."
As previously reported by Hull Live, questions over Ebuyer's future arose when its landlord filed a winding-up petition against the company. The documents now reveal that Urban Logistics Acquisitions 6 Ltd is owed an estimated £324,000.
Ebuyer formed part of the West Retail Group portfolio, which encompasses Wren Kitchens - likewise situated near Howden - before its disposal in 2023. At that juncture, purchasers Mark Reed and seasoned industry figure Rich Marsden declared the enterprise possessed "huge growth potential" and outlined ambitions for European expansion alongside enhanced PC and gaming product ranges.
