The new chairman of TJ Hughes has refinanced the discount department store business and set out to redress its sourcing strategy after soaring costs and slumping margins drove the business to the brink.
Anthony Solomon, who together with turnaround investor Endless invested an unknown amount in the business for a significant stake, said TJ Hughes had suffered from sourcing through exporters rather than sourcing directly from the Far East. Despite a strong performance in the year to January 30, 2010, when profits rose 29% to £6.8m and sales increased 2% to £267m, Solomon said the business had “gone significantly downhill” in the year ended January 2011.
Solomon said management positions were “under review” and added that the deal was a joint venture between Endless and himself, not a management buyout as originally reported.
Ex-Etam chief executive Beatrice Lafon took up the role of chief executive at TJ Hughes in January after Sue Tennant stood down in December. Solomon declined to give details of TJ Hughes’ refinancing but said: “The first job is to renew the cost base and get great product on the shelves.” He will review the supply chain,
headed up by his long-term business partner David Luper, who will also be responsible for buying.
He said there were no plans for any closures at the 57-store business, which is in talks with landlords and trade credit insurers, and that he wanted to expand once it was back on track. An undisclosed amount will be spent on a facelift for the stores.
The deal is the third such co-investment Solomon has made with Endless. In 2008, they bought bookseller The Works out of administration, a year after a similar acquisition of value retailer and wholesaler JTF. Solomon was previously the majority shareholder and chief executive of value department store chain The
Original Factory Shop, which he sold to Barclays Private Equity for £40m in November 2004.
Solomon and Endless acquired TJ Hughes from private equity firm Silverfleet, which bought it in November 2003 as part of a management buyout worth £56m.