MFI receives offers to buy chain of furniture stores
Saturday 20 May 2006
Shares in Britain's largest furniture retailer, MFI, jumped yesterday after it said it had received several bid approaches for all or part of its 200-strong chain of stores. The shares closed nearly 8 per cent higher, up 18.75p, at 119p.
Potential bidders are thought to include rival retailers such as GUS, which owns Argos and Homebase, and several private-equity firms which have circled the loss-making group for some time. The Swedish furniture retailer Nobia, which snapped up MFI's French retail business Hygena Cuisines for £92m in February, was also tipped as a possible buyer.
Analysts said the group, which also owns the Howden builders' merchants business and Sofa Workshop chain, would be lucky if it managed to offload its loss-making retail arm without having to hand money to a buyer. Richard Ratner, at Seymour Pierce, said: "We doubt if anyone would pay for the UK retail arm and thus it could be a question of a 'reverse premium' to take the business and the pension liabilities."
Under new pension legislation, MFI could still be liable for the pensions for up to six years after a sale if the buyer were to go "pop", he said. MFI is saddled with a pension fund deficit of £297m.
MFI slipped £110m into the red last year, from a £20m profit in 2004. Its new chief executive, Matthew Ingle, recently outlined a major restructuring to catapult the retailer back into the black. His predecessor, John Hancock, was fired last October after presiding over a collapse in the company's fortunes with four profit warnings. The turnaround plan will cost £46m this year, plus £35m of asset write-offs. Around 1,470 jobs will go with the closure of two factories and at least 11 MFI stores.
Mark Charnock at Investec said a sale of its store chain would save MFI having to carry out the costly restructuring. It would leave the group with the better-performing 340-strong Howden chain, as Sofa Workshop is also being sold off.
The chairman, Ian Peacock, who plans to step down in the next 12 months after six years in the post, also gave a trading update at yesterday's annual meeting in London. Orders at the retail arm are down 19 per cent so far this year, partly because of its strategy to exit unprofitable sales, and sales are expected to have fallen even more than orders.
Sales at Howden were up 12 per cent overall and by 8 per cent on a like-for-like basis. However, because last year's additional June promotion will not be repeated this year as it ate into profit margins, total sales are expected to be flat this year and like-for-like sales down. But the absence of the promotion should push margins up.
- 1 Gun instructor accidentally shot dead by nine-year-old girl with Uzi gun
- 2 Miley Cyrus' homeless MTV VMAs date, Jesse Helt, is wanted by the police
- 3 Notting Hill Carnival: Woman shares selfie after being ‘punched in face for telling man to stop groping her’
- 4 Pamela Anderson rejects ice bucket challenge because of ALS experiments on animals: 'Mice had holes drilled into their skulls'
- 5 Homer Simpson has taken the ALS ice bucket challenge because of course he has
Exclusive: We share blame for creating 'jihad generation', says Muslim strategist
Robin Williams Emmys tribute led by Billy Crystal criticised for including 'racist' joke about Muslim woman
The Rotherham child abuse scandal is a tale of apologists, misogyny and double standards
Scottish independence TV debate: Pumped-up Alex Salmond bounces back in bruising second round against Alistair Darling
Jeremy Clarkson is a cultural tumour and needs to be removed, says comedian Frankie Boyle
Do you realise just how foolish the UK looks?
- < Previous
- Next >
iJobs Money & Business
£40000 - £48000 per annum + benefits+bonus+package: Harrington Starr: C# Devel...
£45000 - £60000 per annum + benefits+bonus+package: Harrington Starr: C# Swift...
Negotiable: Harrington Starr: A fast growing Financial Services organisation b...
£50000 - £60000 per annum + excellent benefits: Harrington Starr: An award-win...