Bathstore’s future in Endless’ hands

The high street is not a pretty place right now, with retailers continuing to take a bath, including some long established names that will be sorely missed within their local areas by people who remember them in happier, much more buoyant times.

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130-year-old furniture retailer Clement Joscelyne (which also owns two Ligne Roset stores) is one such casualty that recently went into administration casting doubt on the future of its six stores – stretching from Brighton to Norwich – and its 90-plus employees.

However, amid the carnage there are some positive stories, including Bathstore, whose new owners will be hoping more people take a bath over the next few years. These new owners are Leeds-based Endless who specialise in turnaround situations.

They have a decent track record and according to its managing partner Garry Wilson they are often the only bidder for distressed up-for-sale businesses. One of its big successes is The Works that sells books and stationery and has been turned from an operation in administration and losing £6 million annually three years ago to one that is due to make ebitda of £11 million in its current financial year.

As in the case of The Works, Endless typically pays little or nothing for a business, with its investment boiling down to covering the ongoing losses an operation is making. Without disclosing the actual purchase price of buying Bathstore it did reveal that it is paying former owners Wolseley a sum of £15 million over five years of which £11 million is new capital that’s to be invested in the business. 

This should ensure that Bathstore has the financial capacity to stick around for the next few years because although Wilson says Endless plans to hold on to the business for four or five years he does not expect to see much improvement in the fortunes of the high street any time soon.

In fact, he paints a very bleak picture of its immediate future. Speaking with Wilson earlier in the year at his very impressive London office he ran me through his thinking on the doom-laden high street.

Bathstore: Has it a hot future?

For starters, he reckons there is a need for a resetting of landlords’ expectations on rental levels. He details an impending Doomsday scenario whereby interest rates moving upwards and rentals moving southwards will severely hit the UK’s many heavily indebted landlords.

He also believes the UK high street is dull and boring with shopping a disappointing experience and that over the next five to 10 years there will be some fresh ideas injected into the high street model.

Underpinning the Endless purchase of Bathstore is the belief by Wilson that the high street is set to disappear at the hands of online retail. Instead he is of the view that people shop as a form of hobby, but he says there has to be a model developed whereby the physical store does not simply become a showroom for subsequent purchases made online – potentially with rival businesses.

We do not yet know what is planned for Bathstore as Wilson and his team will only just be getting their heads around the operation. But one thing that can be assured is that the management will be in for an overhaul. With The Works, Wilson says only one of the original seven board members remains with the business today.

Despite their successes with retailers, Wilson is more than willing to acknowledge that they are not magicians at Endless and that things sometimes do not turn out as planned. He cites the acquisition of discount retailer TJ Hughes as one failure. Having given it his best shot he suggests it was simply too far gone and that Endless simply can’t turn everything around.

It has to be assumed that Bathstore is in much better condition than TJ Hughes was at the point of hand-over and that it is headed for a bright future. But even Endless wouldn’t bet the house on any single deal – that’s not the nature of turnarounds and certainly not retail in these extremely tough times.

This column was originally published in Kbbreview.