Dangers to watch once the US bug has bitten

IN THE end, it was not just a Sock Shop assistant who ended up on the brink of a large drop. Thanks partly to the disastrous US venture, the company went into administrative receivership in 1990 and was sold later that year to a consortium headed by Murray Johnstone, the Edinburgh investment house.

At its peak, the business founded by Sophie Mirman had been worth pounds 70m.

While that was a sharp lesson for an inexperienced management, the United States has been a tough school for a long list of sadder and wiser British businesses.

In the 1970s, Imperial Group, now part of Hanson, nearly crippled itself by taking over Howard Johnson, a chain of red-roofed roadside restaurants that never made its mind up whether it was catering for a kids' day out or a salesman's meal-on-the-hoof.

Another that fell foul of the more rigorous criminal tendency on the other side of the Atlantic was Ferranti, the electronics company that bought International Signal and Control in 1987 and within two years was taken for a pounds 687m ride by ISC's secretive head, James Guerin. Eventually Mr Guerin was jailed for 15 years, but that was small comfort to Ferranti shareholders: the group went into receivership at the end of last year.

Sometimes, though, problems can come out of a clear blue sky. Gerald Ronson, the former head of his privately owned Heron Corporation, could not have foreseen in 1980 the collapse of the US savings and loan industry, the rough counterpart of Britain's building societies.

But by the time of his enforced spell in the Ford Open Prison in 1990, courtesy of his role in the Guinness scandal, Ronson was beginning to curse the day he had heard of Pima Savings and Loan of Arizona. Heron acquired it in 1980, but it was caught up in the sector's problems and went into receivership in 1990 - at a cost to Heron of around pounds 190m.

The US bug even bit the urbane if other-worldly Sir Terence Conran. Conran Stores, the American home furnishings company sold by Storehouse to a group of American investors for a nominal sum in 1992, was forced to file for bankruptcy protection in January this year.

Even the hard-nosed Stanley Kalms of Dixons Group, the electronic gadgets retail chain, was caught unawares. Dixons bought the US electrical retailer Silo for pounds 210m in 1987, endured losses of another pounds 100m or so, and sold it a year ago for next to nothing.

'I made an initial misjudgement of how to manage the business, which just created a long string of problems,' Mr Kalms said. 'We didn't give enough attention, analysis and thought to what the business was. There was some kind of arrogance, and all retailers suffer from this.'

It is certainly true that British retailing is the sector that has suffered more than any other in the US. John Menzies, Tie Rack, Sears, Laura Ashley and Signet - the former Ratners - have all either lost money there or pulled out.

According to Tony Shiret of BZW, the City's top-rated retailing analyst, British companies fail in the US because 'either they buy rubbish or they underestimate how aggressively competitive retailing is over there'.

He points to the phenomenon of category killers, which so dominate a sector that they are almost impossible to compete with. Toys R Us, now operating in the UK, is a classic. Another, Circuit City, severely damaged Silo.

Other US techniques with which the British have not yet come to terms, at least across the Atlantic, are discount warehouse clubs and clearance malls. Mr Shiret explained: 'About half the clothing sold in America is going through outlet malls. That has destabilised gross profit margins.'

It has also destabilised UK firms' US ambitions. But still they come. The latest is Next, the fashion retailer, which has opened four stores this year in Boston and Washington DC. 'We are taking it one step at a time,' said David Jones, Next's chief executive.