The owner of furniture chain Harveys has called in administrators with the immediate loss of 240 jobs.
Around 20 Harveys stores could be closed if the administration process goes badly.
Bensons for Beds, which is part by Harveys' owners Blue Group, will also see around 50 of its outlets close, leaving between 150 and 175 open.
The company is the latest to suffer a serious downturn in sales amid the coronavirus pandemic.
It is feared that hundreds more people who work at Harveys could soon find themselves unemployed.
Blue Group formally appointed PricewaterhouseCoopers as administrator on Tuesday.
The move leaves the future of Harveys hanging in the balance, with PwC looking for buyers for the business and its three manufacturing plants.
Harveys is not currently taking any new orders but will honour existing ones, according to its website.
Blue Group employs more than 3,000 people, with 1,000 employees yet to receive assurances about their jobs, Sky News reported.
Alteri Investors, which owns Blue Group, has decided to restructure the business so that Bensons will become a standalone business.
"A combination of structural issues and Covid means we are going to have to leave behind the underperforming part of the business", said Alteri chief executive Gavin George, This Is Money reported.
In a statement Harveys said: "We’re putting our feet up for a while and currently not taking any new orders
Existing orders will be delivered as communicated.
"For further information, please contact webadmin@harveysfurniture.co.uk"
Bensons is the second largest bed retailer in the UK behind Dreams in terms of market share.
In November South African retailer Steinhoff International sold Blue Group to Alteri Investors for an undisclosed price.
Around 600 workers will lose their jobs at TM Lewin as the shirtmaker said it would close all of its shops after taking a major hit during the coronavirus pandemic.
A firm hired to restructure the menswear company said it was switching all sales to the internet in a bid to save the brand, but would not be able to rescue its estate of 66 shops.
The news comes weeks after the 122-year-old Jermyn Street shirtmaker was bought by Stonebridge Private Equity through its subsidiary Torque Brands.
On Tuesday, the new owner said that the future of the entire retail sector was facing a "very real threat."
