Jump to content
House Price Crash Forum
Injin

Focus Diy Chain Calls In Bankers For Possible Sale As Debts Pile Up

Recommended Posts

http://www.guardian.co.uk/business/2010/oct/31/focus-diy-possible-sale

The owner of the nationwide DIY chain Focus has called in investment bankers to look for radical ways to revive the fortunes of the heavily indebted business – a move that could lead to a sale.

US private equity firm Cerberus is understood to be taking advice from Lazard on the future of Focus, which struggled through the recession. The UK's fourth largest DIY chain last changed hands, for £1, three years ago.

A likely buyer could be Home Retail Group, which controls the Homebase home improvement business and the Argos chain, and has a £300m cash pile. However, Argos is struggling and it is unlikely that shareholders would approve such a distracting acquisition. Another rival, Kingfisher, which owns market leader B&Q, would probably be blocked from any acquisition on competition grounds. According to analysts Verdict, B&Q has a market share of 27%, while Focus has just 3.5%.

Focus, which has 180 stores in Britain, made a loss of £21m on sales of nearly £490m in the year to 21 February, according to accounts filed at Companies House in August.

In its directors' report, the company says the trading environment was "extremely competitive" during the period but it was in "significantly better" shape at the financial year's end than at the start. Last year it negotiated a company voluntary arrangement that enabled it to cut leases on a number of empty stores that were draining its cash reserves, and also secured a two-year extension on its £50m overdraft. That arrangement expires in December 2011 but Focus is in talks with its banks about refinancing.

According to the accounts, Focus has bank loans and overdrafts amounting to some £230m. One finance agreement, relating to a £60m loan, carries an onerous interest rate at 7% over Libor – the rate at which banks lend to each other. At the end of January some £19m interest had accrued on top of that £60m debt. On a second loan agreement, relating to £100m, the interest is being rolled up until March 2011. Focus's £50m overdraft costs it 4.75% over Libor.

The company also has a pension deficit of £25m at the last valuation, for 21 February 2010. Some £190m of the total debt is with parent company Cerberus, with the balance owned to GMAC and Lloyds Banking Group.

DIY was once the boom sector in retail as TV programmes such as Changing Rooms turned home improvement into a leisure activity. But the industry's fortunes have dwindled in recent years and, according to Verdict, DIY sales are expected to be down another 2% this year. At Focus, however, trials of a new format in 11 stores, with additional cut-price items under the revived Payless brand, are beginning to deliver improved trading. Cerberus could decide to roll this programme out further.

Focus traces its origins back to 1987 when its founder, Bill Archer, quit Crown Paints to set up a DIY business with £300,000 from remortgaging his house. Four venture-capital firms subsequently backed him in a £4.5m buyout of the Focus DIY chain.

The business then subsequently acquired rivals Do It All from Boots, and also bought Great Mills for £250m, then Wickes – which was later sold at a vast profit to building suppliesers' merchant chain Travis Perkins.

Since 2006 the company has been in decline. It was bought by Cerberus, which took on debts of £180m, for just £1 in 2007, and and hired fformer Wickes boss Bill Grimsey was hired to turn it the retailer around the retailer.

Debt is wealth.

Until it isn't.

Share this post


Link to post
Share on other sites

It's a business that without funny debt money and accounting sleight of hand should have died years ago.

I wouldn't rule out it lurching on for another decade though.

Share this post


Link to post
Share on other sites

It's a business that without funny debt money and accounting sleight of hand should have died years ago.

I wouldn't rule out it lurching on for another decade though.

That's pretty much all business, tbh.

:)

Share this post


Link to post
Share on other sites

 But I thought people weren't moving and so were doing up their homes instead?

Quick must buy some more twigs in vases.

If you live near a park or beach then the cost of twigs is considerably less.

Share this post


Link to post
Share on other sites

I wouldn't rule out it lurching on for another decade though.

You never know :) it might be sold .. They messed up badly ... they should have borrowed the money from HBOS or RBS .. then they could go on trading at a loss for ever ! (See JJB sports!)

Share this post


Link to post
Share on other sites

This brings back memories of the early 90's housing crash when several DIY tin shed firms - anyone remember Do It All? - went bust just prior to house prices tanking.

Notice the company name on the back of the overalls and on the van.  Actually it's probably their bankers in disguise and not a rival tinpot DIY firm.

Edited by Mikhail Liebenstein

Share this post


Link to post
Share on other sites

This brings back memories of the early 90's housing crash when several DIY tin shed firms - anyone remember Do It All? - went bust just prior to house prices tanking.

Do It All was the chain started by WHSmith when the country's big established retailers were trying to get into the DIY mass retail market. Boots started their own similar chain. Eventually, the two merged, they were struggling even before the recession, and Boots' rebranded theirs as Do It All.

Things got no better and WHSmith eventually cut their losses and gave their share (literally gave, for free!) of the business to Boots.

Boots eventually exited by selling to Focus which had also consumed Great Mills at a similar time. Texas Homecare went to Homebase (Sainsbury's effort at stitching up the DIY mass market - now a millstone for Argos)

Don't think Do It All formally entered administration but, to a degree, Focus is a hotch potch of DIY retailers that should have all gone to the wall yet through the miracle of private equity debt have lurched on.

Edited by Soon Not a Chain Retailer

Share this post


Link to post
Share on other sites

It's a business that without funny debt money and accounting sleight of hand should have died years ago.

I wouldn't rule out it lurching on for another decade though.

If the BBC can be persuaded to restart "Changing Rooms."tongue.gif

Share this post


Link to post
Share on other sites

Notice the company name on the back of the overalls and on the van.

Gosh, that brings back memories. I used to loathe that ad but now, oddly, it looks quite intelligent. Still can't beat hundreds of women in skimpy bikinis though.

Edited by The Masked Tulip

Share this post


Link to post
Share on other sites

Do It All was the chain started by WHSmith when the country's big established retailers were trying to get into the DIY mass retail market. Boots started their own similar chain. Eventually, the two merged, they were struggling even before the recession, and Boots' rebranded theirs as Do It All.

Things got no better and WHSmith eventually cut their losses and gave their share (literally gave, for free!) of the business to Boots.

Boots eventually exited by selling to Focus which had also consumed Great Mills at a similar time. Texas Homecare went to Homebase (Sainsbury's effort at stitching up the DIY mass market - now a millstone for Argos)

Don't think Do It All formally entered administration but, to a degree, Focus is a hotch potch of DIY retailers that should have all gone to the wall yet through the miracle of private equity debt have lurched on.

lets get this right...the boardroom, populated with people with GODLIKE abilities, on mega salaries...cant work it all out, so they approach a LENDER, because they have a problem that they have BORROWED too much.

Fred Goodwin knew what to do...get out with the best deal and leave everyone else for suckers.

Share this post


Link to post
Share on other sites

You never know :) it might be sold .. They messed up badly ... they should have borrowed the money from HBOS or RBS .. then they could go on trading at a loss for ever ! (See JJB sports!)

If only JJB were the only ones.

Incredibly, several of the other big banks were so alarmed at the amount of business HBOS was cleaning up in the retail sector they were launching major charm offensives to try and win accounts across and trying to poach HBOS staff. :lol:

Share this post


Link to post
Share on other sites

Serves em' right, the place is a total rip off just like all the other DIY stores!! Why would you buy a 15mm compression tee in Focus for £3.99 when you can buy one in Toolstation for £1.64???

I hope Homebase is next, they are the worst, why would you buy a 15mm-1/2" flexible tap connector in Homebase for £10.79 when you buy one in Toolstation for 0.98p???

People are getting wiser to the rip-off merchants, they should either lower their prices or go bust.

Share this post


Link to post
Share on other sites

 Actually this 1986 ad is even more interesting. Shows how prices have changed.

Screw driver- very expensive in modern terms.  Paint - very cheap.

Of course, screwdriver made in China. Paint largely made in this country or Europe.

Share this post


Link to post
Share on other sites

If only JJB were the only ones.

Incredibly, several of the other big banks were so alarmed at the amount of business HBOS was cleaning up in the retail sector they were launching major charm offensives to try and win accounts across and trying to poach HBOS staff. :lol:

Oh dear. I wonder how exposed HBOS is exposed to the retail sector? Maybe it needs a ratings downgrade!tongue.gif

Share this post


Link to post
Share on other sites

Serves em' right, the place is a total rip off just like all the other DIY stores!! Why would you buy a 15mm compression tee in Focus for £3.99 when you can buy one in Toolstation for £1.64???

I hope Homebase is next, they are the worst, why would you buy a 15mm-1/2" flexible tap connector in Homebase for £10.79 when you buy one in Toolstation for 0.98p???

People are getting wiser to the rip-off merchants, they should either lower their prices or go bust.

Trade counters are much cheaper.

B&Q have kept themselves well positioned though, if Joe Public goes down that avenue in a big way.

Share this post


Link to post
Share on other sites

 

Actually from an advertising as an art-form point of view I think the Do It All Ad was quite clever and probably not massively expensive to make. Annoyingly catchy catch tune, and some clever little bits in the dance routine. I thought the bathroom unit mirror sliding closed to reveal the second dancer's face was pretty clever.

Edited by Mikhail Liebenstein

Share this post


Link to post
Share on other sites

Of course, screwdriver made in China. Paint largely made in this country or Europe.

Screwdrivers are screwdrivers.

Generally we want our paint not to make us infertile or turn our hands into flippers or smething. SO the chinese (bless em) with their safety standards aren't in the market much.

Share this post


Link to post
Share on other sites

 Actually this 1986 ad is even more interesting. Shows how prices have changed.

Screw driver- very expensive in modern terms.  Paint - very cheap.

Now this is what I call an advert:

I don't work for them, honest I don't!

Share this post


Link to post
Share on other sites

Serves em' right, the place is a total rip off just like all the other DIY stores!! Why would you buy a 15mm compression tee in Focus for £3.99 when you can buy one in Toolstation for £1.64???

I hope Homebase is next, they are the worst, why would you buy a 15mm-1/2" flexible tap connector in Homebase for £10.79 when you buy one in Toolstation for 0.98p???

People are getting wiser to the rip-off merchants, they should either lower their prices or go bust.

All rh the sheds are the same

http://www.currys.co.uk/gbuk/vivanco-hdmi-cable-1-5m-04249131-pdt.html

£14.99 for a digital cable that you can get for £1.50 from amazon.

its digital FFS...it either works or it doesnt.

Share this post


Link to post
Share on other sites

You never know :) it might be sold .. They messed up badly ... they should have borrowed the money from HBOS or RBS .. then they could go on trading at a loss for ever ! (See JJB sports!)

Played that one already - look at the list of backers in snippet from the article and lloyds is in there........

People spend the big money on housing refurbishments when they move, with stupidity priing again that volume is going to be very weak as shown by current transaction volumes. Something is going to break, wouldnt be surprised to see trade volume at these places down 10/20% next year, with inflation making up some of the gap. Chea money has not flushed then with customers.

Share this post


Link to post
Share on other sites

Screwdrivers are screwdrivers.

Generally we want our paint not to make us infertile or turn our hands into flippers or smething. SO the chinese (bless em) with their safety standards aren't in the market much.

Nah, it's just too heavy and voluminous and the plants in Europe are largely automated. Could easily be churned out over there - a lot of the pigments would still come from over here.

Have a look at where some of the big boxes of jelly sweets, in the supermarkets, for Halloween are coming from.

Things like edible icing decorations, that require a lot of hand-finishing, on Christmas and birthday cakes have been coming fron China for a number of years now - 'product of more than one country' is the euphemism to look out for.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 140 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.