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Bonmarché deal puts jobs and shops at risk | Bonmarché deal puts jobs and shops at risk |
(32 minutes later) | |
Jobs and shops at struggling fashion chain Bonmarché are under threat after UK billionaire Philip Day tabled a takeover bid. | Jobs and shops at struggling fashion chain Bonmarché are under threat after UK billionaire Philip Day tabled a takeover bid. |
The deal values the Yorkshire-based chain, which began in 1982 and now has 312 shops specialising in clothing for the over-50s, at around £5.7m. | The deal values the Yorkshire-based chain, which began in 1982 and now has 312 shops specialising in clothing for the over-50s, at around £5.7m. |
Edinburgh Woollen Mill Group owner Mr Day warned he expected a "material reduction" in headcount at the chain. | Edinburgh Woollen Mill Group owner Mr Day warned he expected a "material reduction" in headcount at the chain. |
Bonmarché employs 1,900 full-time equivalent people, its website says. | Bonmarché employs 1,900 full-time equivalent people, its website says. |
The struggling retailer warned last month that trading had deteriorated, adding that it expected to lose £5-£6m this year. | The struggling retailer warned last month that trading had deteriorated, adding that it expected to lose £5-£6m this year. |
Using his Dubai-based investment vehicle Spectre, Mr Day has bought another stake in Bonmarché and now holds a 52.4% of the retailer. As he now owns more than half of the company's shares, this has triggered a mandatory takeover bid. | Using his Dubai-based investment vehicle Spectre, Mr Day has bought another stake in Bonmarché and now holds a 52.4% of the retailer. As he now owns more than half of the company's shares, this has triggered a mandatory takeover bid. |
However, the offer of just 11.445p a share is well below Monday's closing price of 18p. | However, the offer of just 11.445p a share is well below Monday's closing price of 18p. |
Mr Day said he would do a "store-by-store profitability assessment" with the aim of closing underperforming shops unless it was possible to implement "reduced rents, staff reductions or other cost saving measures". | Mr Day said he would do a "store-by-store profitability assessment" with the aim of closing underperforming shops unless it was possible to implement "reduced rents, staff reductions or other cost saving measures". |
He added he was "well positioned to provide advice, guidance and support to secure the long term future of the Bonmarché business, its stores and employees". | He added he was "well positioned to provide advice, guidance and support to secure the long term future of the Bonmarché business, its stores and employees". |
If the deal goes ahead, the company would become private and the shares delisted. | If the deal goes ahead, the company would become private and the shares delisted. |
The businessman started his career at clothing manufacturers Coats Viyella and Wensum before eventually taking over Edinburgh Woollen Mill. | The businessman started his career at clothing manufacturers Coats Viyella and Wensum before eventually taking over Edinburgh Woollen Mill. |
Through Edinburgh Woollen Mill, Mr Day has bought several clothing chains, including discount chain Peacocks and the upmarket Austin Reed and Jaeger brands. | Through Edinburgh Woollen Mill, Mr Day has bought several clothing chains, including discount chain Peacocks and the upmarket Austin Reed and Jaeger brands. |
Spectre's statement said: "The owner of Spectre, Philip Day, has a successful track record within the retail sector, especially in turnaround and distressed situations." | Spectre's statement said: "The owner of Spectre, Philip Day, has a successful track record within the retail sector, especially in turnaround and distressed situations." |
Bonmarché has not commented so far on the offer. | Bonmarché has not commented so far on the offer. |
'No relief' for shareholders | |
Maureen Hinton, retail research director at GlobalData, said it was "an excellent result for Bonmarché". | |
"Being taken out of constant City reporting and scrutiny will allow the retailer to take a long-term view of the business and benefit from the shared assets of the Edinburgh Woollen Mills group." | "Being taken out of constant City reporting and scrutiny will allow the retailer to take a long-term view of the business and benefit from the shared assets of the Edinburgh Woollen Mills group." |
She said that while the offer "must be a relief for management", the low price being offered was "not such a relief" for shareholders given that the shares stood at about 120p last summer. | She said that while the offer "must be a relief for management", the low price being offered was "not such a relief" for shareholders given that the shares stood at about 120p last summer. |
Bonmarché is one of a string of well-known names suffering in a tough High Street environment. | |
Last year, Poundworld, Toys R Us and Maplin all went bust and disappeared altogether. Other household names - Homebase, Mothercare, Carpetright and New Look - were forced into restructuring deals with their landlords, closing hundreds of stores. | |
Music chain HMV recently fell into administration before being bought. | |
The increasing popularity of online shopping, higher business rates, rising labour costs and the fall in the pound following the Brexit vote - which has increased the cost of imported goods - have been blamed for contributing to retailers' woes. |