The Works to go on sale for £80m after fast turnaround

The owners of The Works plan to sell the discount bookseller for about £80m, following a significant turnaround at the 270-store chain that fell into administration in January 2008.

The Leeds-based private equity firm Endless is poised to appoint the accountancy firm KPMG to run a sale of the retailer, which is likely to commence in the first half of next year.

The Works would then become the latest retailer to be put on the market, following the shoe chain Office, which hoisted the "for-sale" sign this month.

The turnaround at The Works, which also sells arts materials, toys, gifts and stationery, is a fillip for high-street booksellers, who have struggled to combat the big supermarkets and the online giant Amazon. The specialist Borders UK disappeared last year.

Endless rescued The Works in May 2008 and later parachuted in Anthony Solomon as chairman and Bob Lister as managing director to restructure the company. They have cut costs and headcount, particularly at the head office, improved margins by sourcing products from the Far East, smartened up in-store merchandising and returned the chain to its discount roots.

The Works is thought to have delivered earnings before interest, tax, depreciation and amortisation of £10m for the year to 30 April 2010. Industry sources put a potential price tag on the retailer of about £80m.

While Endless has not formally hired KPMG to run a sale of The Works, discussions are at an advanced stage, and the appointment of the accountancy firm is expected soon. Both Endless and KPMG declined to comment.

Given that Endless acquired The Works for about £17m in 2008, the private equity firm will net a lucrative pay out if they complete a sale. Endless initially bought 210 stores. It has since added 60 shops and sees potential for up to 600.

In June 2008, Endless sold 50 per cent of its investment in The Works to Anthony Solomon and David Luper, who joined as buying director.

The equity in the retailer is still shared between Endless and the retailer's management team. According to its latest accounts at Companies House, The Works delivered total sales of £88.8m for the year to 25 April 2009.

Mr Solomon, Mr Lister and Mr Luper have a reputation for turning round value retailers, as they worked together at the general merchandise chain The Original Factory Shop. Mr Solomon bought The Original Factory Shop for £7m in 2002 and sold it for £39m in under two years.

In 2005, Hermes Private Equity backed a £50m management buy-out of The Works, with debt from HSBC, but they struggled to make it work.