Do It All sale costs Boots pounds 312m
Thursday 20 August 1998
The loss results from a goodwill write-off following the sale of the do-it-yourself business to Focus Retail Group, an independent DIY retailer backed by Duke Street Capital, a venture capital fund.
Boots will remain guarantor on 29 of the stores' leases, but the company said there was no danger of the remainder reverting to Boots if the company foundered as Focus has acquired the holding company.
The deal marks the end of a painful period for Boots, which formed the Do It All group in 1990 following the merger of its Payless DIY chain with WH Smith's Do It All format.
The joint venture never worked and was a regular loss-maker after the housing market collapsed in the early 1990s.
Two years ago WH Smith paid Boots pounds 50m to take its half share of the business away.
"This deal enables us to concentrate our efforts on growing our core businesses. We wish the new owners every success," said Lord Blyth, the Boots chairman. The deal was welcomed in the City, and Boots shares rose 35p to 1,005p.
"It means all of the company's non-core activities have now gone. The management can now be more focused and the overall portfolio looks better," one said.
The deal makes Focus Britain's third-largest DIY retailer. The company has around 10 per cent of the market after B&Q and Homebase. The two have combined sales of over pounds 500m.
However, its prospects were immediately questioned by industry experts.
Clive Vaughan of Verdict, the retail consultants, said: "It seems like a full price and a difficult management task to integrate the two businesses."
However, Focus marketing director Jim Lower said there were very few overlaps between the businesses as Focus was based mainly in the North- east while Do It All's main strength was in the south.
Focus, which has 71 stores, plans to re-brand Do It All's 139 outlets as Focus/Do It All and to introduce more of a "lifestyle element" to the shops. It will add its Pet World format, which is in 30 of its Focus stores, and is considering adding Craftwork centres offering products for rag-rolling, stencilling and other popular decorating techniques.
Focus recorded profits of pounds 4m on sales of pounds 148m last year. Duke Street Capital, which controls 60 per cent of the company, is injecting a further pounds 25m into the company to help fund the deal.
Do It All made an operating profit of pounds 2.5m on sales of pounds 337m. The company has struggled with a weak brand name and a poor store portfolio. It has also struggled against more powerful competitors with much greater market shares.
The sale by Boots means it has now sold most of the businesses it acquired as part of the ill-fated Ward White acquisition 10 years ago.
It sold the Fads and Homestyle DIY business to Alchemy, the venture capital group, last year.
The only remaining Ward White business is Halfords, the car accessories chain. However, Boots said yesterday that Halfords was a core business and that there were no plans to sell it.
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