View from City Road: Getting what they want for a bargain

If buy it cheap and sell it dear is the key to successful retailing, then Gerald and Vera Weisfeld should transform the fortunes of Brown & Jackson. Just four years after they sold the 37-store What Everyone Wants chain for pounds 50m, they could snap up a 41.5 per cent stake in a group with almost six times as many stores for just over half that.

The difference is that WEW made a pounds 6.6m profit in the year before the Weisfelds sold it; Brown & Jackson's Poundstretcher chain lost pounds 10.5m last year and, barring a Weisfeld miracle, is unlikely to return to profits this year. Ian Gray, brought in two years ago to turn the company around, protests that he never expected his strategy to produce results until 1994.

The Midland Bank, whose refusal to extend its banking facilities precipitated the Weisfeld rescue, clearly disagreed.

Shareholders, promised growth when they coughed up pounds 21m last year, are equally disgruntled.

Growth at Poundstretcher is proving difficult to come by. Mr Gray and his team have failed to find a formula that brings in enough shoppers to compensate for low margins, yet the company remains committed to an aggressive expansion programme. It is saddled with a number of unprofitable high street stores on expensive leases, yet continues to sell the freeholds it owns.

If the Weisfelds' buying and marketing skills can produce even half the 8.8 per cent margin achieved by them at WEW, the pounds 40,000 a year they will each be paid will be excellent value. The rest of the management team have proved less of a bargain.