Clinton Cards set to buy back Birthdays stores after collapse
Wednesday 17 June 2009
Clinton Cards, the 692-store retailer, is poised to buy back about 140 Birthdays stores as early as today, after it placed its loss-making subsidiary into administration last month.
The bid by Clinton Cards to repurchase 140 of Birthdays' 332 stores in favourable locations could save hundreds of jobs and keep the brand on the high street, but it will still leave a rump of outlets on the market. Birthdays had 2,100 staff when it appointed the restructuring specialist Zolfo Cooper as administrator on 21 May.
Clinton Cards has struggled recently, partly because of Birthdays, but it has also battled fierce competition from the supermarkets and a perception among some shoppers that its cards are expensive. Clinton Cards bought Birthdays for £46.4m in December 2004, but the chain failed to deliver the expected return and added to its debt woes.
It is understood that another unnamed bidder could separately purchase a parcel of about 10 Birthdays stores from Zolfo Cooper. Market sources said the Leeds-based private equity firm Endless had taken a look at the Birthdays portfolio, but was no longer bidding for it.
In March, Clinton Cards refinanced its debt and negotiated a new payment schedule with banks until 2012, but its pre-tax profits fell by 46 per cent to £12.5m over the half year to 1 February.
Clinton Cards, Endless and Zolfo Cooper all declined to comment.
In a statement on 21 May, Clinton Cards said that after a deterioration in trading conditions since last autumn, about half of its Birthdays stores were loss-making and that a solvent restructuring of the business was not viable. At the time, Don Lewin, the chairman of Clinton Cards, 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."
On 21 May, Clinton Cards said that the Birthdays administration will not have a "material impact" on its trading for the 52 weeks to 2 August. However, it expects to incur a non-cash asset writedown of about £44m, including all intra-group liabilities.
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