Four thousand jobs threatened at Focus DIY By Julia Kollewe

 DIY chain calls in Ernst & Young following poor performance during recession and failure to secure rescue deal.

                                                                                                        Photograph: MBI / Alamy

Focus DIY has 178 stores and employs 3,919 people.

 Nearly 4,000 jobs are at risk after Focus DIY, Britain's fourth-largest DIY chain, called in administrators having failed to clinch a rescue deal.

 Ernst & Young were expected to be appointed at midnight after the company, which has struggled for years, particularly during the recession, admitted that it was close to defaulting on its huge debts and "that there were no alternatives that could be explored any further".

 "The directors have sought consent from the business's lenders to appoint E&Y as the administrators. All stakeholders including staff are being informed," Focus said in a statement. Lloyds and GMAC have yet to agree to the administrators.

 The Focus website stopped taking online orders and the company's statement was posted on the site. The chain has 178 stores and employs 3,919 people. A spokesman said the shops would remain open for another five days, after which E&Y will decide if they can continue as a going concern.

 The loss-making company was reportedly in talks with the restructuring firm GA Europe but failed to agree a deal. Its US private equity owner, Cerberus, began to look for a buyer for the chain last autumn.

 Focus made a loss of £21m on sales of nearly £490m in the year to 21 February 2010, compared with a loss of £95.4m in 2009, according to the latest figures.

 David Jeary, a retail analyst at Investec, said: "My sense is that Focus has suffered for a long time because it's been squeezed between the two major DIY chains, B&Q and Homebase.

 Both have much better defined customer propositions and trying to carve out a niche between them has proved difficult for Focus." B&Q, owned by Kingfisher, is by far the biggest DIY chain, with a store in most British towns and is similar to the big warehouse-style operations in the US known as "category killers". Homebase has a softer touch, marketing itself as a home adornment and gardening specialist. Focus has struggled to come up with new formats.

 Wickes, the third-largest chain, has many lines but with less choice within categories. "Not all customers need a choice of 63 screwdrivers when 15 will do. Wickes too has a very defined image," said Jeary.

 Focus began in 1987 when Bill Archer quit Crown Paints to set up a DIY firm with £300,000 from remortgaging his house. He and a former business partner bought two small chains, Choice DIY and Focus, and rebranded all 12 shops as Focus DIY.

 Four venture capital firms later backed Archer in a £4.5m buyout. The business grew rapidly by acquiring rivals Do It All, Great Mills and Wickes (the latter sold to builders' merchant Travis Perkins in 2005). Focus was bought by Cerberus, which took on debts of £180m, for £1 in 2007 and hired former Wickes boss Bill Grimsey to turn it around. It is thought the US firm spent about £200m trying to rescue Focus.

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