Alba sells off leather products to Rutland

Alba, the consumer electronics and leisure goods distributor yesterday sold its leisure goods to private equity group Rutland Partners for £51m. The company said the sale was part of its plan to slim-down operations and focus on higher margin businesses, following the £44m annual loss it reported in March.

A company spokesman said: "This is a textbook study of a firm adapting in a market that has changed enormously. The last few years have seen margins diminish as competition in consumer electronics retail has become ever more intense."

The cash element of the sale will enable Alba to repay a significant amount of its outstanding debt, he added. Alba was formed in 1964 as a UK distributor for consumer electronics products made in Hong Kong and, latterly, China. It has held the licenses to such familiar brand names as Goodmans, Bush and Grundig. In the late 1980s and 1990s the firm moved into distribution of leisure goods, with its product portfolio now including kitchen appliances, electrical hair products and power tools, under brands such as Power Devil, Nicky Clark and Hinari.

However, the recent challenge from supermarkets that have started to devote more shelf space to electronic products has forced Alba to exercise greater control over its distribution and brand positioning. It has also sought to cut costs, with the number of staff falling from 500 to below 250.

Alba chief executive Daniel Harris said: "The main strategies for the firm's three-year business plan are improving relationships with retailers and focussing on fewer, better engineered core products. We are concentrating on higher margin products such as LCD TVs and the growing medical electronics sector. We hope to announce a full-year profit in March."

The FTSE 250 firm's share price dropped from 253p in October 2006 to a low of 140p last month, but rose after the announcement of the leisure division sale to close at 179p yesterday.