Guardian.co.uk

The snowy weather that gripped the UK last month has helped to push discount clothing chain Ethel Austin into administration.

Over 3,700 jobs were put at risk today when administrators from MCR took control of the company and its sister firm Au Naturale, a homewares chain. MCR was called in after attempts to arrange a refinancing deal collapsed. It hopes to find a buyer for the two companies, but admitted that this could be difficult in the current economic climate.

'The joint administrators are trading the companies in administration in the short term with a view to finding a purchaser for the businesses as a going concern,' said Geoff Bouchier, MCR partner.

'We are reviewing the financial position of the companies and are, at this stage, unable to rule out store closures and redundancies,' Bouchier added.

Mrs Ethel Austin founded the company in 1934 and ran it from the front room of her Liverpool home. Today it operates 300 stores around the UK. Its management had hoped to secure fresh working capital to keep the business running and settle bills with its suppliers, some of whom have reportedly not been paid since before Christmas. But the adverse weather conditions in January had a damaging effect on trading, which restricted the companies' cash flow.

'The snow wasn't the only factor [behind MCR's appointment] but it definitely contributed,' said an MCR spokesman. 'People couldn't come in or go out – it had a big impact on sales.'

Economists have warned that the disruption caused by last month's 'big freeze' could shatter the UK's delicate economic recovery as it emerges from recession. Data released last week showed that activity in Britain's services sector fell more than expected during January.

This is the second time in under two years that Ethel Austin has fallen into administration. Back in April 2008 it also turned to MCR, who sold the business to Elaine McPherson, the founder of fashion chain MK One. McPherson had pledged to return the company to its 'former glory', and within days had also taken the Au Naturale chain out of administration.