Woolworths will begin a huge closing down sale across its 813 stores today after Deloitte, the administrator, admitted that it had been unable to find a buyer for the retailer. The disappearance of the stores group will end a 99-year presence on Britain’s high streets and leave 30,000 staff facing a bleak Christmas and new year.

Deloitte is standing by a pledge to pay workers at the stores until Christmas Day, but Neville Kahn, a partner, gave a warning last night that some shops may have to close as soon as Boxing Day. The accountant will tell Woolworths employees of their fate today while talks will continue with a number of buyers who are interested in taking a rump of several hundred stores.

Yesterday, Sir Geoff Mulcahy, who led Woolworths during the 1980s when it was part of the Kingfisher Group, emerged as the latest name to be linked to the group. Sir Geoff is targeting about 500 stores. But it is understood that potential bidders for the chain, whose banks pushed it into administration last month, have themselves been hit by the credit crunch.

Sources say bidders – who at one stage included Theo Paphitis, the Dragons’ Den star, cannot raise enough money from their lending banks to fund Woolworths’ working capital requirements. The store expects to clear out nearly all of its stock before Christmas and bidders need fresh funding to restock in January. But banks are understood to be reluctant to lend to a new retailer as Britain plunges into a recession.

Attempts by Deloitte to sell on a rump of Woolworths stores have also been hampered by the complex ownership structure of the properties. Woolworths stores are owned by an unusually large number of freeholders, many of whom hold individual stores in their pension funds.

The administrator has faced a huge logistical challenge in coralling hundreds of invidual owners. Sources close to the sale process say Deloitte has missed the opportunity to sell on Woolworths as a going concern.

The stores group is expected to be broken up and sold to rival retailers including Tesco, Waitrose, Iceland and Poundland in small batches and they would not have to keep on Woolworths’ staff. CB Richard Ellis, the Commerical property adviser, is running a separate auction process for small groups of stores.

Mr Kahn said yesterday: “While we are still seeking bids from interested parties, Christmas is clearly the busiest time of the year for retailers and it is prudent to do all we can to sell existing stock before Christmas.”

Woolworths’ cost-cutting is causing real concern for rival retailers which are bracing themselves for a wave of dumped stock flooding the high street during one of the toughest Christmas trading periods in living memory. Leading retailers including Harrods, which launches an unprecedented preChristmas 50 per cent off sale today, are slashing their prices in an effort to compete with a flood of offers from their rivals.

Philip Green’s lightning move on companies owned by Baugur, the Icelandic retailer, was said to be motivated not just by a desire to expand his own empire, but by a need to prevent large amounts of cut-price goods hitting the streets and forcing his own fashion businesses to match discounts.

Sir Philip tried and failed to buy a number of Baugur assets in October, just after the Icelandic banks, which lend to several Baugur-backed companies, collapsed. Retailers also fear the spectre of boarded-up high streets if stores belonging to Woolworths and other retailers have to be shut.

The fate of EUK, Woolworths’ once-profitable distribution arm, also looked uncertain last night. Deloitte has been unable to find a buyer for the company, which distributes CDs and DVDs to a range of retailers and earlier this week EUK was not making any deliveries. Mr Kahn said the supplier is now delivering goods, but several retailers have cancelled their contracts with EUK.

Last week the reverberations from EUK’s collapse were felt at Zavvi, the music retailer, which is supplied by EUK. The chain, previously known as Virgin Megastores, ran out of key Christmas goods because EUK had failed to make deliveries.

Reverberations are being felt further afield. Yesterday Time Warner, the huge US-listed music and film group, said that the collapse of Woolworths would hit its revenues in this quarter.

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