Coffee chain administration threat

Coffee Republic's core division was poised for administration

Coffee Republic's core UK division was poised to be placed into administration after its parent group said it had already lodged court documents.

The group - a 184-strong coffee chain in the UK - requested for its shares to be suspended "pending clarification of the financial position of certain subsidiaries".

It said it had lodged documents in court in anticipation of appointing administrators to those subsidiaries - including its UK operating company.

Coffee Republic - which was not immediately available for further comment - has been struggling amid sliding sales and losses. It posted losses of £527,000 for the six months to September 28 after same-store sales slid 0.2%.

The coffee house operator and franchiser had around 195 outlets internationally at the end of last year, 184 of which were in the UK. Of the UK outlets, 19 were run by the company, 51 were franchises and 114 were concessions.

The group was formed by Bobby and Sahar Hashemi, a brother and sister team. Their first coffee bar opened in 1995 in London's South Molton street, near Bond Street.

It said late last year, on reporting the interim losses, that it had been struggling under a "toughening climate", but had hoped to reverse the declining sales trend with more aggressive sales and marketing activity.

The group also said it had become free of bank debt after paying off its £3.3 million bank borrowings.

It had also aimed to be earnings positive for the current financial year to the end of March for the first time in its history.