October 3, 2005 | posted by Michael Baxter in Uncategorized |

The High Street woe hit MFI and the Focus DIY stores this weekend with rumours that the two stores are in danger of breaking their banking covenants.

Last week, when the CBI released its latest report on the High Street, with the news that its distributive trades index was at a 22 year low, it said that: “The worst affected are sales of furniture and carpets, other household durable goods, DIY and hardware items - all sectors associated with the housing market which was still quite buoyant last September - but which has since weakened markedly.”

And then, right on cue, we hear the rumours.

Fortunately for MFI, it’s got its builders’ merchant subsidiary: Howdens, And while its core MFI chain struggles to keep its head above water with sales down 15% recently, its less well known subsidiary continues to grow, making up for an expected £50mn loss at the furniture division.

But, with bank borrowing at £85mn, its boss, John Hancock, is in talks with bankers, the Royal Bank of Scotland.

And the knives are out for Mr Hancock. The weekend saw plenty of press speculation that he was fighting for his job, and this morning the FT said that the battle is already lost, and that the man, who has been chief executive since 1999, is to step down.