Littlewoods stores up for sale
Wednesday 05 March 1997
Littlewoods said it was inviting bids for the business but moved to quell unrest among its 10,000 retail staff yesterday by saying it would only sell the underperforming high street stores if it was able to sell the whole business as a going concern. It also said it would keep the operation unless it achieved a reasonable price, thought to be well in excess of pounds 500m.
The shop workers' union, Usdaw, expressed anger at the way the proposed disposal was leaked to the press before staff were consulted. Michael Gordon, a union spokesman, said: "I shall be seeking a firm commitment from Littlewoods... that any prospective buyer will guarantee continuity of employment and pension rights for our members."
James Ross, the former Cable & Wireless chief executive who took the helm at Littlewoods last year, said it had decided to sell its stores operation following a strategic review and consultation with the Liverpool- based group's 32 shareholders.
The family is understood to have become impatient with the retail division's lack of progress and came close to selling thecompany at the end of 1995 when a consortium put together by Sir David Alliance of N Brown was narrowly rebuffed. Mr Ross said yesterday a sale of the whole business was not a possibility and a rumoured flotation was off the agenda.
Littlewoods is Britain's largest privately owned company, wholly owned by members of the family of John Moores, who founded a pools business in the 1920s before diversifying into mail order and then moving onto the high street in 1937.
The decision to sell the shops reverses the group's policy in recent years when it planned to sell the mail order side and concentrate on retail. In the meantime, the shops have continued to fall behind their peers with sales per square foot of under pounds 200 a shadow of the estimated pounds 600 generated by rival Next.
The poor performance of the shops, where like-for-like sales growth in the run-up to Christmas was a below-average 3 per cent, means profits from the division still languish pounds 5m below the pounds 38m achieved in 1993 despite the investment of pounds 140m of capital in the interim.
Mr Ross said he expected interest from around half a dozen potential buyers and he hoped to have secured a bid within three months. The company declined to say what would be an acceptable price for the business but described a pounds 450m offer made by frozen food retailer Iceland in 1995 as "wholly inadequate".
Following any sale Littlewoods would focus on its home shopping and pools businesses and would reinvest the proceeds in its mail order operations where it is proposing to acquire Sears' Freemans business for pounds 390m.
Littlewoods announced a 15 per cent rise in pre-tax profits for the year to December from pounds 97.3m to pounds 112.1m.
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