Banks eye sale of Robert Dyas

The banks who control indebted high street hardware chain Robert Dyas are considering putting the business up for sale following a return to profitability.

The company, which trades from 100 stores in the UK, has recently conducted a beauty parade of potential advisers. The process is being led by Geoff Brady, the company’s non-executive chairman and former Kingfisher director. Cavendish Corporate Finance is shortly set to be appointed to advise the board on exploring options including a sale of the business, which it is hoped would bring in new capital to fund a store modernisation programme.

In a sign of how tough trading on the high street has become, the sale of the chain is not expected to command a price tag higher than £25m, according to people familiar with the situation.

The retailer is majority owned by Lloyds Bank and Allied Irish Bank as the result of a debt-for-equity swap last September, which halved its debts to £15m following an ill-fated management buyout in 2009.

Cavendish, Robert Dyas and its lenders all declined to comment on the possible sale, first reported on Sky News.

Founded in London in 1872, Robert Dyas has morphed from an ironmongery business into a general homewares retailer selling a variety of household products including kitchenware, electrical appliances, gardening products and DIY ranges.

Last Friday, the company reported pre-tax profits of £2.7m in the 12 months to March 27, turning around pre-tax losses of £10.4m reported a year previously. Management have expressed hope that the chain could start expanding again, following a lengthy period of disruption caused by the restructuring of the business and reorganisation of its debts.

Six new store openings are planned, alongside the refurbishment of a further seven stores.

Homewares has been a very tough area of the the retail market, with recent administrations from Focus DIY , Habitat and discount department store TJ Hughes . However, other retailers are proving that the small convenience store format can still work on the high street.

The Original Factory Outlet has grown sales and store numbers in the past year by expanding into towns abandoned by other retailers, selling keenly-priced ranges of homewares and clothing. All the major supermarket chains are opening growing numbers of convenience stores, which also sell non-food lines.
Robert Dyas has proved itself to be a resilient business. The family-run company survived the Blitz in the second world war, which destroyed its head office, warehouse and 18 stores. In 1997, the company’s head office and warehouse were again destroyed by fire.

Source : Claer Barrett - FT.com
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