A Danish furniture chain that vowed to take on Ikea when it entered the UK two years ago has become the latest victim of the credit crunch.

Ilva said it had appointed Kroll, the corporate recovery specialist, as administrator of its UK business in a move that leaves 400 jobs hanging in the balance.

The Reading-based business runs three out-of-town stores, in Thurrock, Gateshead and Manchester. It arrived with a fanfare in 2006 and said it would rival John Lewis by the end of the decade.

However, results published this year showed that the business made a £62 million loss on £26 million of sales in the year to April 2007.

Retail experts said this latest high street collapse reflected the huge strains on the furniture and home furnishings sector as consumers defer big-ticket purchases.

Stock market-quoted Land of Leather was last week forced to raise £15 million in a rescue rights issue while rival ScS Upholstery is hoping a rescue takeover bid can save it from collapse.

There was growing speculation last night that at least two more privately owned retailers in the sector were on the verge of administration.

One expert said: “This is the start of a pretty broad consolidation in the furniture sector. There are far too many people who sell furniture, and who sell it in a way that is little different to any others.”

Kroll said Ilva had decided to make a “strategic withdrawal” from the UK because of the tough market conditions.

Peter Saville, a partner in Kroll, offered reassurance to Ilva’s customers. He said: “It is business as usual for the stores and it is our intention to honour all existing customer orders.

“The trading environment for all retailers is particularly tough at present, but we are continuing to trade the business as a going concern. We will be assessing the options for the business in the coming weeks.

“We fully appreciate that this is a concerning time for employees as well as customers, and we will keep all stakeholders as fully appraised as possible.”

There are fears that more than 100,000 jobs could be lost in the retail sector over the next two years given the growing pressures on the high street.

At least a dozen chains have gone into administration so far this year, including Dolcis, Ethel Austin and Sleep Depot.

At the start

— Ilva launched in the UK under Martin Toogood, a former chief executive at Habitat

— He said: “The UK needs an injection of interesting retail products. Retailing in the UK is getting pretty boring.”

— Ilva’s 10,000 products were initially an average 20% more expensive than Ikea

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