28 November 2016
Dunelm Group plc
Proposed Acquisition of Worldstores, Achica and Kiddicare
Dunelm Group plc ("Dunelm" or the "Company") announces that, through a wholly owned subsidiary, Globe Online Limited ("Globe"), it has today reached agreement to purchase the assets of the WS Group for a total consideration of £8.5m.
The WS Group consists of Worldstores Limited ("Worldstores"), Worldstores Kiddicare Limited ("Kiddicare") and Achica Limited ("Achica").
The WS Group currently generates annualised revenue of c.£100m and has c.650 employees. Worldstores, which was established in 2008 by founders Richard Tucker and Joe Murray and is the biggest part of the WS Group, is one of the UK's largest online retailers of products for the home and garden. There are over 500,000 products on the site. Worldstores has built a proprietary technology platform that manages suppliers and enables rapid cross-docking of stock directly from suppliers to customers so that customers can have next day, or day of choice, delivery. Much of the product requires 2-man delivery.
Achica is a members-only online store offering furniture, homewares and accessories, often at significant discounts to RRPs for limited periods through flash sales. Kiddicare is a multichannel retailer, selling nursery supplies and merchandise for children and young families.
John Browett, CEO of Dunelm, commented: "We are excited by this opportunity to accelerate the growth of our internet operation, more than doubling its size, and enhancing our position as the destination Homewares retailer in the UK, both online and offline. Between the store network, broad product range and strong brand that Dunelm has built and Worldstores' extensive homewares and furniture offer and unique platform for next day delivery and flash sales, we will strengthen our leading position as the UK's Home of Homes."
Richard Tucker and Joe Murray, Worldstores' founders, commented: "We're delighted to be working with Dunelm, in whom we have found a partner who shares our vision for our company and brands, and is backing our ambitious plans for growth."
The WS Group management, including the founders, will continue to run the WS Group and will be appropriately incentivised.
All three propositions complement Dunelm's existing offer. Furthermore, Worldstores provides an extensive furniture range and a unique technology platform which will provide Dunelm with additional benefits. Dunelm will also be able to improve performance by sharing product ranges, harmonising terms and extending the multichannel delivery proposition, the benefits of which Dunelm expects to be in the region of £10m per annum over the short to medium term.
The Company plans to inject up to £15m into WS Group to fund historic working capital and to manage disruption for suppliers and customers. Dunelm will also pay c.£3m of ancillary and transaction related costs which are expected to be identified separately in the Group's accounts.
The Board currently expects that in Dunelm's financial year ending 1 July 2017, from the date of acquisition, the WS Group will incur trading losses of around £5-10m. In Dunelm's financial year ending 30 June 2018, the first full year of ownership of the WS Group, it is expected that the WS Group will be at least break-even.
The acquisition is subject to each of the companies in the WS Group being placed into administration and the Company expects to acquire the WS Group businesses later today from the intended administrators, William Wright and Robert Croxen of KPMG LLP.
ENDS
There will be a conference call for sell-side analysts this morning at 8am. For dial-in details please contact Gina Bell at MHP Communications on [email protected].
For further information, please contact:
Dunelm Group plc |
0116 2644439 |
John Browett, Chief Executive |
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Keith Down, Chief Financial Officer |
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MHP Communications |
020 3128 8100 |
John Olsen/Simon Hockridge/Gina Bell |
[email protected] |
Notes to editors
The WS Group
Worldstores acquired the Kiddicare business in 2014 and the Achica business in 2015. The Worldstores Group has approximately 650 employees and offices in London and Peterborough as well as one store in Peterborough.
In the year ending 31 January 2015, the latest year for which audited accounts have been published, gross assets were £42m (or £21m excluding cash) and the WS Group delivered a loss before tax of (£6.5m), including negative goodwill of £7m, with an EBITDA loss of (£5.0m).
Dunelm
Dunelm is the leading homewares retailers in the UK with 160 stores nationwide and an online webstore at dunelm.com. It has over 9,000 employees. Dunelm's headquarters are in Syston, Leicestershire.
Dunelm offers customers a wide range of quality homeware items from bedding, sofas, curtains, cushions, quilts and pillows, to kitchenware and dining, lighting, wall art, furniture and rugs, as well as premium brands such as Dorma and Fogarty and in-house production of made-to-measure curtains and blinds.
Dunelm was founded in 1979 as a market stall business, selling ready-made curtains. The first shop was opened in Leicester in 1984 and over the following years the business developed into a successful chain of high street shops before expanding into broader homewares categories following the opening of the first Dunelm superstore in 1991.
In the year ending 2 July 2016, the latest year for which audited accounts have been published, gross assets were £346m and the Dunelm Group delivered a profit before tax of £129m, with EBITDA of £154m.
