A condition of the arrangement was that landlords could not enforce lease guarantees against the parent company. PowerHouse wanted to vacate the lossmaking stores without taking full responsibility for outstanding rent; the property companies understandably felt that set a very dangerous precedent.

If the scheme was acceptable, they argued, what was to stop other troubled retailers taking a similar route? Future rental revenues would no longer be guaranteed. The British Property Foundation estimated that £38 billion of assets were at risk. At the time, PowerHouse chairman Bruce Gordon argued that such claims were simply 'hysteria', but he must have known he was taking on very large corporations, with big pockets and potentially much to lose.

In fact, the CVA only bought time – six months to be precise. In August, PowerHouse went into administration and another multiple brand disappeared from high streets and outof- town parks.

However, that was not the end of the matter. Two groups of landlords, one comprising Prudential, Land Securities, Hammerson, Derwent London and Legal & General, the other British Land, Dresdner Kleinwort and Lloyds TSB, brought an action against the group. The landlords claimed the key condition in the CVA was unfair because creditors who would be paid in full had the main say on whether the agreement was adopted. The case was heard in the High Court in March, with judgement delivered in May.

The judge decided that the agreement had been 'unfairly prejudicial' to landlords and refused PowerHouse leave to appeal. The property industry heaved a collective sigh of relief. The judge also ruled that the majority of the claimant's costs should be paid by PRG and its supervisors, the accountancy firm Smith & Willamson.

£200 million hit

When PowerHouse disappeared, both DSG and Comet will have celebrated the removal of yet another competitor.

At DSG, in the 24 weeks to the end of April, Currys superstores produced a like-for-like sales increase of 4%, with gross margins up by 0.6% as the initial benefits of a new buying strategy were realised. PC World delivered a similar like-for-like improvement. Internet sales rose by 75%, driven by 'reserve and collect' at Currys and 'collect@store' at PC World.

Overall for the year, the group expects to deliver underlying operating profit in line with current market expectations. But problems elsewhere in the group meant its results will be hit by a write-off of between £180 million and £200 million to cover a write down in the carrying value of its operations in Italy, the closure of PC City in France and the sale of Genesis Communications, which sells mobile phone services to businesses.

Despite consumers having 'to face a number of financial issues, particularly in the short term, including the impact of higher tax and interest rates', DSG still expects modest growth in the UK consumer economy in the year ahead.

Outlook uncertain

In the three months to the end of April, main rival Comet's revenue grew by 4.9%, 2.7% on a like-for-like basis. During the quarter, the chain opened two new stores and refurbished and extended three others, all of which trade with a mezzanine floor.

Jean-Noel Labroue, chief executive of Comet's parent Kesa, warned that “against the very strong comparatives of last year, when the World Cup triggered significant demand for flat screen televisions”, weaker like-for-like sales are anticipated in the second quarter. He believes that whilst consumer confidence in continental Europe appears positive, it remains uncertain in the UK.

And at John Lewis the growth in sales has indeed slowed, though the Partnership is still showing a healthy year-on-year gain. Weekly results have been erratic, which is always to be expected with the timing of Easter changing each year. The cumulative increase of 9% to the end of March (nine weeks) has drifted to 5.5% by 19 May (sixteen weeks).

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