UK family-run high street retailer collapses owing millions

New documents reveal that "there will be insufficient funds available" for unsecured creditors owed £3.4 million by the firm which operated stores across Scotland and England.

Eleven Pagazzi lighting and home interior stores were closed when the family-owned company that operated for 45 years slumped into administration.

It led to 70 job losses while some assets were sold for £125,000 and a "handful" of stores remained in operation.

Administrators BTG said in a newly published report that “the business has developed an established, recognisable brand, a loyal customer base and long-standing supplier relationships”.

The report added: "In recent years, the company's trading performance has been impacted by the same challenges affecting many UK retailers.

"The sector has seen a sustained shift in consumer behaviour towards online purchasing as well as reduced disposable income, increased price competition and greater promotional pressure from both domestic and international customers.

"This led the directors to conclude that a formal insolvency process was necessary to protect value and enable the core business and brand to continue within a more appropriate and sustainable business model."

Headwinds suffered by Pagazzi have been seen across industries but the administrators said: "In particular, the retail sector has been affected by a series of government-imposed and regulatory cost increases, including rises in the National Living Wage, increases in employer National Insurance contributions and continued pressure from business rates and occupancy costs.

"These have been accompanied by higher energy, logistics, and supply chain costs.

"Collectively, these factors have materially increased the fixed cost base of store-based retail businesses at a time when footfall and demand have become more volatile.

"Whilst the Pagazzi brand has continued to generate sales and retain customer recognition, the legacy store-based operating model and fixed cost structure has become increasingly misaligned with the realities of the market.”

It said of the concessions business that estimated unsecured creditor liabilities were £1.675m, and £1.795m in its services arm, although this could change.

The administrators said that the company made a loss of £500,000 from April 2025 to February this year as a result of poor sales during the winter.

The report stated: “Based upon realisations to date and estimated future realisations there will be insufficient funds available to enable a dividend to be paid to the unsecured creditors.”

Thomas McKay, managing partner of BTG in Scotland and Northern Ireland, who managed the restructuring activity, said earlier that “the retail sector has seen some very tough months of late in Scotland and this has also affected the lighting sector, mainly due to increasing competition and high trading costs”.

He said: “Reduced margins, slower consumer spending and rising operating costs are creating challenges for many high street retailers, and unfortunately these are the main factors that saw the Pagazzi stores and concessions no longer able to trade.”

The administrators said: “The company was a long-established family business that was restructured two years ago, but has suffered from the pressures of increased operating costs that have affected many retail businesses in recent times.”

The growing weight of existing pressures around supply chain issues and labour costs are being exacerbated by new rates valuations across sectors and all of these factors have been cited elsewhere time and again.