TJ Hughes directors mull £36m buy-out

The executive directors of TJ Hughes confirmed yesterday that they are considering a management buyout which would value the discount department store retailer at more than the current market price of 120p per share. The shares closed 0.5p higher at 120.5p valuing the company at £36m.

TJ Hughes recently rejected a proposed £28m takeover offer from a consortium led by the Liverpool entrepreneur Chris Gorman, saying its offer of 95p a share was not fair value. A third group has also made an approach though its identity has not yet been disclosed.

The MBO team is led by George Foster, chief executive, and also features Andy Goody, finance director, and Briar Douglas, operations director. It is thought to have secured venture capital backing for a bid. A deal could be announced before Christmas though it is more likely to come in the new year.

TJ Hughes issued a trading update last week saying like-for-like sales for the second half were running 5 per cent up on the previous year. This compares with a 3.9 per cent increase announced on 26 November.

The company denied margins on the sales were low, saying it was full-priced new stock. Old excess stock that caused a profits warning earlier this year has been returned to the warehouse.

TJ Hughes was a stock market star until this spring when it issued a shock profits warning caused by stock problems.

Elsewhere in the retail sector yesterday, J Sainsbury made two boardroom appointments. It has promoted Stuart Mitchell and Sara Weller to the main board from 1 January. Mr Mitchell, 40, who has been with the company since 1984, will be executive director in charge of trading, retail, and supply. Ms Weller, 40, will take control of strategic planning, formats, Sainsbury's Bank and the Sainsbury's to You e-commerce venture. She joined from Abbey National in 1999.

The shares rose 6.5p to 354p.