Ugo Stores was experiencing serious supply problems before its sale was announced by owner Arthur Harris this week, The Grocer can reveal.

The 20-store chain, launched last January, was due to be sold yesterday to an undisclosed buyer. The Grocer has learned that its main supplier Nisa stopped deliveries more than a week ago. Another supplier, who did not want to be named, confirmed that it too had ceased deliveries.

Photos on, a forum set up following the demise of Ugo’s sister company Haldanes Stores, revealed the impact on the shelves of a northern Ugo. They also showed PoS for a ‘25% off everything’ sale.

However, Harris (pictured) insisted Nisa had been “fully paid up to date” and that stock levels were low because the business was preparing for a sale. Since September, he had been in talks with a national retailer “that had expressed an interest in acquiring a major shareholding” so had “positioned the future of the business based on that”, he claimed.

“The deal was necessary due to the worsening economic climate, but placing a new brand into the marketplace was always going to be an uphill struggle,” he said, and the deal had fallen through last month leaving Ugo “in a very difficult trading position”.

Under the new deal with a “well-known and established brand name” all store staff would transfer to the new retailer, he said. A number of people at Ugo’s Grantham head office would lose their jobs, but some would transfer to roles in his other businesses.

Meanwhile, an administrators’ report on Haldanes Stores revealed legal proceedings against The Co-op Group are on hold. Harris launched action last year claiming the society had breached contract conditions when it sold him former Somerfield stores.