Billionaire businessman and Edinburgh Woollen Mill-owner Philip Day has successfully taken women’s value clothing retailer Bonmarché Plc private after his investment vehicle Spectre Holdings closed its takeover of the company with a 93% share.
The company bought a 52.4% stake in the struggling retailer back in May, triggering a mandatory takeover bid. Since then, top executives including the CEO and CFO sold their stakes to Spectre, and on 10 July Bonmarché’s second-largest shareholder, Artemis Investment Management, offloaded its 12% share to Spectre.
Bonmarché has released several negative trading updates recently, with shares tumbling in March after the retailer warned underlying pre-tax loss for the year was likely to be between GBP5m and GBP6m (US$6.64bn-$7.97bn).
As a result of the takeover, Bonmarché is to be delisted from the London Stock Exchange and will become a private company. In its bourse statement, Spectre said the cancellations would take effect no earlier than 12 August.
Earlier this year, GlobalData analyst Honor Strachan said that taking the business private would provide Bonmarché with breathing space to reconsider its turnaround strategy and make short-term, potentially high-cost decisions such as existing leases.
“Day has rightly recognised that there is clear gap in the market for Bonmarché, especially since the opportunity is ripe for stealing deserted Debenhams shoppers, but there are fundamental issues that need addressing. The size of its store portfolio (300+) is cumbersome and a burden on costs, especially since many require modernisation. Brand appeal does little to draw in 45-64s, limiting customer acquisition opportunities and leading to an over-reliance on a diminishing customer group. Moreover, despite achieving double-digit sales growth in the channel in 2018, Bonmarché’s online penetration (c.13%) remains far below the clothing sector average (29.9%), causing it to lose out in an outperforming channel.
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By GlobalData“Day’s understanding of the mature shopper in the UK will aid his Bonmarché recovery plan, particularly since the Edinburgh Woollen Mill (EWM) shopper profile mirrors almost perfectly with Bonmarché’s in terms of age breakdown…For Day, the challenge will be differentiating the brands in terms of product, styling and branding – currently, there is little to separate them looking at their online platforms. A shopper should be able to trade up and down between the brands, as they can at H&M & Other Stories, but quality, price and the shopping experience must be reflective of its position in the market.”
Spectre has already said it would look to “reduce the cost base to a sustainable level whilst minimising the impact on operational performance,” warning of a “material reduction in headcount” across Bonmarché. According to its website, Bonmarché employs 1900 full-time equivalent staff and has 312 shops.
Day’s Edinburgh Woollen Mill empire includes brands such as Jaeger and Peacocks.
