Billionaire warns of job losses after snapping up struggling Bonmarche
Philip Day has bought a 52% chunk of the retailer in a deal valuing it at 拢5.7m - and warned underperforming stores could close.
Tuesday 2 April 2019 16:39, UK
Retail billionaire Philip Day has bought a controlling stake in struggling womenswear chain Bonmarche and warned that it could face store closures and "material" job losses.
The businessman behind the Edinburgh Woollen Mill group has acquired 52% of the company in a deal valuing it at £5.7m, via his Dubai-based holding company Spectre.
Mr Day paid 11.4p a share, a third lower than Bonmarche's closing price on Monday - when it was valued at £9m - and less than a tenth of the value the stock reached last summer.
Bonmarche, which has more than 300 stores across the UK and 1,900 employees, has been battered by a series of profit warnings.
The most recent two weeks ago forecast that it would slip to an underlying loss of up to £6m for the year to the end of March.
Chief executive Helen Connolly said in December that trading conditions were "significantly worse even than during the recession of 2008-9".
Spectre said that it was "well positioned to provide advice, guidance and support to secure the long-term future of the Bonmarche business, its stores and employees".
It said Mr Day, who has previously snapped up brands including Peacocks, Austin Reed, Jaeger and Jacques Vert, had a successful track record in the turnaround of struggling retailers.
Shares ended the day 25% lower at 12p.
The new owner will seek to take the company into private ownership and de-list it from the stock market, and carry out a detailed review including pricing, the viability of stores, the supply chain and products and the management of the business.
Underperforming stores "may be closed unless reduced rents, staff reductions or other cost saving measures can be successfully implemented", Spectre said.
"As a result of its review, and based purely on publicly available information, Spectre expects a material reduction in headcount across Bonmarche," it added.
Russ Mould, investment director at AJ Bell, said: "Taking the business private and out of the City spotlight would theoretically help the retailer to focus on a recovery plan and not have its every move scrutinised by investors.
"However, shareholders aren't getting a good deal from the takeover so they would lose out should Day be successful in revitalising the business.
"His approach is very similar to fellow retail mogul Mike Ashley in that he likes to acquire troubled groups out of administration, or while they are on the knees when trading as a public company."