Bonmarché rescue to mean major job losses and store closures
After the excitement of news of the Bonmarché buyout by Philip Day comes the realisation that the billionaire entrepreneur is likely to close a raft of stores and cut jobs.
Day has warned that job losses could be significant after he bought out the company’s biggest shareholder (private equity firm Sun Capital) and launched an offer to buy the rest of the shares and take the company private.
The business, which his offer values at a lowly £5.7 million despite the chain comprising over 300 stores, has faced major challenges resulting in falling sales and profit warnings. While bids are often at a premium to current share prices, the Day bid was at a 24% discount and the share price fell further after it was announced.
The board of Bonmarché has urged shareholders not to act for now (although clearly, many of them sold their shares on Tuesday) and said it is considering the offer. But the fact is that with a stake of 52%, Day is effectively in control of the firm.
Day’s holding company, Spectre, though which he bought the shares, has not yet held talks with Bonmarché management or had a look at the firm’s accounts but Day believes there are some obvious ways to improve Bonmarché’s performance.
That means shutting loss-making stores, cutting the size of its HQ, looking at distribution centre staffing, rationalising its product offer and renegotiating supplier deals.
Spectre is expecting to take several months on a thorough review of the business followed by a “material reduction in headcount across Bonmarché”.
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