Dreams, the UK’s biggest bed retailer, has been sold out of administration to a private equity firm but 400 jobs could be lost in a brutal culling of nearly 100 stores.
Sun European Partners has acquired Dreams for a knock-down price of £35m, largely comprising the distressed retailer’s debt, in a pre-packaged administration. The private equity firm, which also owns sofa chain SCS, has taken on 171 of Dreams’ stores and its two manufacturing facilities, saving more than 1600 jobs.
But Sun European has offloaded 95 of the worst-performing outlets after Ernst & Young was appointed as administrator on Tuesday night. Mike Clare, Dreams’ founder who sold the business for £222m to Exponent Private Equity in 2008, failed in his bid to buy back the chain. The bed retailer’s former chief executive may now acquire some of the unwanted 95 stores, which will remain open while the administrator seeks a buyer.
Alan Hudson, the joint administrator at Ernst & Young, said: “High street retailers have faced unprecedented conditions over recent years, and the market for higher value discretionary purchases has been particularly tough.”
He added: “Dreams… in common with many others has suffered as a result of this depressed retail environment, a rapid expansion of its store portfolio and onerous lease liabilities. Whilst recent performance has improved, it has seen a decline in like for like sales across its store portfolio as well as its operating margins being squeezed. This has resulted in the business being unable to continue to operate outside of administration.”