MFI last night insisted there were no plans to cut back its 600-strong workforce at the Hygena factory in Stockton.

Concerns were raised after an alliance enabling furniture retailer MFI to sell its Hygena-branded kitchens from Currys stores was scrapped.

MFI and Currys owner, Dixons, said they were halting their Hygena at Currys venture because sales growth had not been strong enough and all 130 concessions would be closed between July and September.

But an MFI spokeswoman told The Northern Echo: "We will still be selling Hygena products at MFI stores and we don't expect demand to fall.

"At present, there are no plans to make any redundancies at the factory in Stockton."

But MFI will lose about £5m in exit costs and wipe an additional £3m from operating profits.

Customers were reassured that all orders would be honoured and after-sales service would continue to be provided once the business has shut down.

MFI chief executive John Hancock said the company was focused on supporting employees affected by the move.

Consultations are due to begin tomorrow and it is hoped many staff can be relocated to other parts of the business.

He said: ''Hygena at Currys has been a worthwhile experience for both sides but we cannot justify continuing the partnership.''

The venture was set up in autumn 2000 and it is thought that margins from kitchen sales were not sufficiently high to be split between MFI and Dixons.

Its demise is the latest blow to MFI, which blamed teething problems with a new supply chain management system for a sharp fall in last year's profits.

In March, it told investors that bargain hunting by shoppers in the January sales was likely to eclipse improvements to the supply chain.

In addition to its UK retail arm, MFI has a significant presence in France and owns the Howden Joinery business.