Clinton Cards is to buy 196 stores from Birthdays, the loss-making subsidiary it put into administration last month. The £3.5m deal is expected to save almost 1,500 jobs.
The group said yesterday that £3.25m of the total sum will be used to reduce the debt Birthdays owed when it collapsed. The 196 stores, which will still be operated under the Birthdays brand, were profitable to the tune of £2.7m in the year to AugustClintons chairman, Don Lewin commented: "We are very pleased to be able to report the successful purchase of a large proportion of the Birthdays stores thereby ensuring employment for 1,450 people." The group has also renegotiated many of the rents agreements with landlords on the stores.
David Stoddart, analyst at Altium Securities, said: "The potential uplift in profit should be more than enough to ensure the deal is earnings enhancing".
Clintons has suffered in the current climate, as well as the challenge from supermarkets muscling into the gift card space. Birthdays performed particularly poorly, and in May, Clintons said the losses were unsustainable and called in specialist administrator Zolfo Cooper.
Mr Lewin said: "In the current environment, the group cannot sustain supporting losses of approximately £7m a year at Birthdays with limited opportunity to improve on that performance in the foreseeable future."