KAYS may have to close because this distribution division suffers from over-capacity. Before Reality' s merger with GUS, 35 per cent of its revenues were derived from other sources.

Because Reality now only serves GUS empty capacity has resulted. The management should lease out the surplus capacity to restore its former position. Reality is even well placed to tender for Royal Mail work now that market is open.

Why is the closure short sighted?

1. Home shopping is tailor-made for internet shopping and this is growing. The company will only fulfil this potential if it retains its distributive capacity.

2. High street and out-of-town competition will lose market share to home shopping because of rising fuel prices.

3. The EU is pledged to retain open border trading with China. To bulk-bought unbranded value retailers like GUS this is a gift from God.

4. Digital television will enter every household in Britain because of the phasing out of analogue broadcasting. GUS already has a home shopping channel presence and will benefit further from digital, armchair purchasing.

5. Interest rates are rising. The catalogue pay-by-instalment model will become increasingly attractive as interest rates rise.

6. The unit has a high fixed asset base with no scrap value and the Bransford Road site is worthless real estate which would cost a fortune to close. Unlike some closures there would be no going back when these trends materialise.

JAMES LAMBERT,

Worcester.