WH Smith pulls out of Do It All at cost of pounds 63m

Boots and WH Smith finally ended their disastrous Do It All DIY joint venture yesterday. Boots has agreed to take control of WH Smith's 50 per cent share of the loss-making business.

The decision to walk away from the six-year partnership will cost WH Smith a total of pounds 63.5m. This includes a pounds 50m staggered payment to cover the cost of selling unwanted stores. It is also waiving a pounds 13.3m loan to the chain. Boots will include an pounds 80m provision in its current-year figures to cover its share of the costs.

Boots plans to sell or close around 60 of the worst-performing stores and concentrate on the remaining 134. No decision has yet been taken on possible job losses. The chain employs 6,600 staff.

Do It All was created by the 1989 merger of WH Smith's Do It All and Boots' Payless DIY chain. It proved a financial catastrophe, consistently losing ground to rivals such as B&Q and Sainsbury Homebase. Although it made a profit in 1991 it has lost money every year since, including pounds 20m last year. In total its losses have reached more than pounds 60m. Boots and WH Smith have invested a further pounds 75m in the business during that time in an attempt to restore it to profitability.

The decision to end the venture is part of a four-month strategic review of the WH Smith retail empire undertaken by the new chief executive, Bill Cockburn, who joined from the Post Office in January. The remaining details will be announced today and are expected to focus on improving the core WH Smith chain. Commenting on the Do It All decision, he said: "With hindsight, the venture was a disaster. But at the time of the merger the DIY market was booming and it looked like a good deal."

Boots' chief executive, Lord Blyth, said he was confident that the present strategy of improving the 134 stores would work as consumer demand picked up. Like-for-like sales in the core stores have improved by 6.6 per cent in the first 15 weeks of the current year. He added that with further improvement the chain could break even next year.

"We recognise the risks of this deal but we have no doubt that pursuit of the existing strategy is appropriate for the business at this time."

Analysts welcomed Smith's decision to abandon its involvement but questioned Boots' forecast on profits. "There's no way it will break even next year," one said. "They need to increase sales by more than 6 per cent and no capacity is being withdrawn form the market. They will have to take share from others."

Boots shares rose 12.5p to 607.5p. WH Smith edged 3p higher at 484p.

News
peopleFrankie Boyle responds to referendum result in characteristically offensive style
Arts and Entertainment
Highs and lows of the cast's careers since 2004
News
news
New Articles
i100... with this review
PROMOTED VIDEO
News
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Senior BA - Motor and Home Insurance

£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

Market Risk & Control Manager

Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...

SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Head of Audit

To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

Day In a Page

Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam