Chris Gorman, the Scottish entrepreneur who founded DX Communications and Reality, the e-commerce business sold to GUS, has taken control of The Gadget Shop retail chain.
The boys' toys retailer currently has 44 stores, and Mr Gorman said his new role as executive chairman would be to significantly expand that number. The Gadget Shop's founder, Jonathan Elvidge, will stay on as chief executive, responsible for product innovation.
Mr Gorman said: "The set of skills required to run 44 shops is different to that needed to maximise profits and take the business to the next level."
Mr Elvidge founded the hi-tech gifts chain as one store in 1991 in a shopping centre in Hull, where the business still has its headquarters. Since then it has rebranded as gadgetshop.com and now has a profitable e-tailing division.
Mr Gorman said The Gadget Shop needed new bricks and mortar outlets in Edinburgh, London and other city centres, but refused to say how many shops he planned to open.
"I've literally spent two days in the business last week. The company only approached me two weeks ago.
"This business offers a great opportunity for growth and has in essence all the key ingredients that make for a successful retail business – high footfall outlets, brand dominance, great IT and an exceptional distribution capability."
The business was touting for additional investment to drive product developments, and to enable one founding shareholder to sell out. The business will receive additional debt financing from Mr Gorman and his backers over the next three to five years. The business will then be floated or sold to a trade buyer.
Mr Gorman – who describes himself as "the ultimate gadget lover, into boys' toys and always having to have the latest and the best" – is tapping into his personal fortune to part-fund the deal. He is worth an estimated £34m, making him one of Scotland's 100 richest men. He has assembled a consortium of his business associates, backed by West Coast Capital, the venture capital fund. No financial details of the deal were given.
The Gadget Shop made a loss of about £200,000 in the financial year just ended. In the year to June 2001 it had sales of £37m from its 44 stores across the UK and Ireland, where it was one of the early retailers of microscooters.
Mr Gorman made £35m when he sold Reality to GUS in 2000. DX Communications was sold to BT Cellnet in 1999 for £42m. Earlier this year, he was thwarted in his attempt to buy TJ Hughes, the discount retailer which has fallen to JJB Sports after a protracted auction that set the chain's value at £42m.
Mr Gorman said: "I have certainly earned brownie points with my three boys. When I was trying to buy TJ Hughes, they weren't that impressed, but now I am buying The Gadget Shop, they love me. I brought back a set of guns that fire harmless foam pellets, and we spent the weekend playing with those."
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