Whittard of Chelsea
Special Situations
Whittard of Chelsea
All things tea and coffee.
Deal Status: Current
Overview
Whittard of Chelsea is a retailer of speciality teas, coffees and related homeware and gifts. It is a quintessentially British brand with no direct competition, and was acquired by Baugur in 2005 for £21.5m, 5.7x EBITDA of £3.7 million (£46.1 million sales). Over-expansion, loss-making stores and excessive head office costs led the business into the red, and by December 2008 the business had 130 stores, turnover of £43 million and an EBITDA loss of £4.3 million which the insolvent Baugur and Landsbanki were unable to support.
The business was acquired via a pre-packaged administration for 0.6m, with asset-backing provided by day-one stock of 4.7 million and running stock levels of 2.2 million. Funds were provided as senior secured debt, and EPE acquired the entire capital structure.
Strategy
Within one month, 51 loss making stores were closed, reducing the total to 79 stores, and improvements were made in store operations, POS and merchandising. The head office was relocated to a shared office with another of EPE's portfolio companies, Past Times, and a new, stronger management team installed. Further, the warehouse was consolidated with the existing Past Times operation and product lines and supply contracts were reviewed and renegotiated where appropriate.
EBITDA losses have been significantly reduced following the measures undertaken over the course of 2009.
Following the restructuring the business is now well positioned to grow its web, wholesale and franchising channels and focus on international expansion.
Link: www.whittard.co.uk
