Whittard of Chelsea (current)
Distressed Small and Medium-Sized Private Companies
Retailer of specialist teas, coffees and related homeware and gifts. "Quintessentially British" brand with no direct competition. 30% of tea and coffee custom is repeat business focused on specific product lines, with the residual custom largely gift-led and tourist targeted. The company was acquired in 2005 by Baugur in a transaction with an enterprise value of £21.5 million, 5.7x EBITDA of £3.7 million (£46.1 million sales). At the time of acquisition by ESO plc the business had 128 stores, turnover of £43 million and an EBITDA loss of £4 million which the insolvent Baugur and Landsbanki were unable to support. Losses were primarily due to over-expansion, loss-making stores and excessive head office cost. However, around 50% of the stores were profitable with some exceptionally profitable.
EPE entered negotiations with Landsbanki and Baugur to acquire the business, ultimately acquiring it out of administration. The business was acquired for £0.6 million, with asset-backing provided by day-one stock of £4.7 million and running stock levels of £2.2 million. The restructuring plan involved the closure of 48 of 128 stores, the closure and re-location of the head office and rationalization of distribution channels. The restructured entity is expected to generate £29 million turnover in the year to 31 December 2009.
