Focus reduces debt in preparation for float

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The Independent Online

Focus Group, the DIY retailer which owns the Focus and Wickes chains, is preparing for a stock market flotation that could value the company at £1.2bn.

The group has accelerated debt repayments and begun the search for financial advisers to prepare an exit for its private equity backer, Duke Street Capital.

Focus will this morning trumpet sales of £1.5bn for the year to last October, swollen by the acquisition in 2000 of the Great Mills chain.

It will also highlight an accelerating trend, as like-for-like sales were up 11 per cent over the Christmas and New Year trading period.

Analysts believe that Bill Archer, the founder and chairman, stands to net £300,000 for his 25 per cent stake.

Mr Archer said Focus has led the consolidation of UK DIY and will be able to a take greater share of the £12bn retail market this year.

"Focus operates in one of the most exciting and dynamic retail markets in the UK. We estimate that the UK DIY retail market has grown by at least 6 per cent a year in each of the last five years, with recent trading suggesting that, despite slower economic growth, sector fundamentals remain robust," he said.

Mr Archer founded Focus in 1998 and, through a string of acquisitions, has taken it to the number two slot in UK DIY, behind B&Q. He bought the Do-It-All chain from Boots in 1998, followed by Wickes in September 2000, and then Great Mills from RMC in December of the same year. Insiders confirmed the company is looking to hire investment bankers to advise on a flotation, which would take place at the end of the year or early in 2003. Duke Street currently owns 50 per cent of the equity.

A statement today to the Luxembourg stock exchange, where Focus's bonds are traded, will highlight stronger than expected cashflow, which has allowed the group to pay off £45m in loans ahead of schedule. It had net debt of £467m at the end of October.

The strong like-for-like sales performance since its financial year-end puts additional pressure on Kingfisher, owner of B&Q, whose shares suffered last week from market rumours that new kitchen sales had been poor in the vital post-Christmas period.

Mr Archer promised to roll-out a new Focus Wickes Warehouse concept to rival B&Q's superstore format, following a successful trial of the idea in Glasgow. "The group intends to create a genuine alternative to the B&Q Warehouse through its new format, which combines the strengths of its two brands under one roof."