BRITAIN'S largest photographic retailer, Jessops, yesterday announced plans to axe one-quarter of its UK stores with the loss of 550 jobs in a bid to revive its fortunes.
Nine of the 81 stores to close will be in Scotland where the company currently has 35 shops. Nearly 70 of Jessops 260 Scottish staff are to lose their jobs.
The Leicester-based camera specialist, which announced pre-tax losses of GBP25.2m for the six months to April 1, blamed the downturn on falling prices prompted by heavy internet and supermarket competition as well as the rise in use of camera phones.
The prices for digital compact cameras are estimated to have gone down by 50per cent in the past six months alone, with the cost of memory cards also down by half.
The shops to close in Scotland include two in Glasgow, at the Fort and in Sauchiehall Street, as well as outlets in Edinburgh, Portlethen, Aberdeen, Inverness, Dundee, Banchory and Nairn.
Just eight months ago, Jessops more than doubled its size in Scotland by taking over the 19 stores of photographic retailer MacKinnon's of Dyce, the creator of Photo Factory, in an GBP815,000 deal.
Founded by Frank Jessop more than 70 years ago, Jessops said the closure of 26per cent of its portfolio would leave it with 234 profitable outlets. Six shops have already closed, with another 19 at the end of their leases.
The company plans to - develop its website, Jessops. com, and refocus the business on the growing digital printing and photo merchandising markets.
One of the key men behind the restructure is the seasoned deal-maker David Adams, who was appointed executive chairman last month. Mr Adams was deputy chief executive at House of Fraser, which was sold to a consortium of investors that included Baugur and Scottish billionaire Sir Tom Hunter for GBP351m last year.
The cuts come at a time when the global digital camera demand is stronger than ever.
According to the market research firm IDC, worldwide digital camera shipments rose 14.5per cent in 2006 to 105.7 million. Japanese makers, which control 70per cent of the market, performed even better, as shipments increased 22per cent in 2006 compared to 8.4per cent a year earlier. Profitability among cameramakers is also on the up. When Canon posted its results in late January, its camera division saw operating margins rise from 19.8per cent to 25.8per cent.
While the number of cameras Jessops sold rose by 2.4per cent in the six months to April 1, falling prices meant revenue from the sales was flat.
But some analysts say Jessops's pricing policy has not helped its position in the marketplace. The cheapest compact digital camera available on Jessops's website comes in at GBP90, while Dixons website and Tesco Direct have models available for less than GBP30.
The company also said the uncertainty surrounding the business had led to shortages of key products, meaning likefor-like sales were down 12.9per cent in the 12 weeks to June 17.
Chief executive Chris Langley said the group hoped to return to underlying profit by the first half of the next financial year.