The scaled-down Barretts department store in St Neots will be closing despite huge efforts to keep it open after the company’s bankers pulled the plug.

In a statement issued to The Hunts Post yesterday, the store's directors confirmed they had launched a 13-month project last June to divide the building into smaller units, one of which would be a “mini” Barretts, and were bewildered by the decision.

“During the refitting of the building into several retail units, an area, previously occupied by Waterstones book-shop, has been opened for Barretts to trade from,” the statement said.

“Unfortunately, even though the 13-month project is coming to the final stages there has been a relatively small overspend on budget, which the company's bank is unwilling to support.

“We find this decision bewildering as the asset value of the property has grown steadily throughout the various stages of refitting and the retail trading revenue is starting to build with the autumn and Christmas selling period ahead.

“The bank's decision has left us with no alternative but to raise immediate funds and thereby force the closure of the new Barretts.”

The store was opened in 1888 by Arthur Barrett as a men's clothing shop and in 1889, Charles Huckle, aged 12, was employed as an assistant. When Mr Barrett died from meningitis aged 29, Charles Huckle continued working for his widow, Kitty, and took over the business in 1908 when she died.

The family-run business has attempted to diversify over the years and opened a coffee shop in 1991, toy department in 1993 and a book shop the following year, and owner Alan Huckle believes the closure will have wider implications for the retail future of the town.

“This action will almost certainly mean the shop will be unable to survive and will be lost to the town,” he said.

“The independent retail sector is suffering some of its hardest challenges to succeed in the present retail economic conditions.

“We believe the bank are treating Barretts as just another shop doomed to close and appear unable to recognise that we have had the foresight to address these issues and have just weeks left on the timetable to complete the changes.”

An announcement on the company's website confirms the wool department will continue under new management and new stock will be sold at reduced prices.

Town mayor, Councillor Derek Giles, said: “From a personal point of view, the loss of such a well-established and long-serving business is very sad. The company has obviously suffered from the competition of internet shopping and also the out-of-town supermarkets, which offer free parking.”

Deputy mayor, Councillor Barry Chapman added: “Like very many of St Neots residents, I am deeply saddened by this announcement. This store is at the heart of St Neots retail. The loss of the store must in great part be attributed to the failure of the planning authority to balance local housing growth with actions to preserve town centre retail, unsustainable levels of business rates and lack of determination to bring key buildings such as the Old Falcon back into the local economy.

“My personal thanks go to the Huckle family and all of the staff team who have worked so hard to try to continue Barretts's survival.”