Bathstore, the UK’s biggest bathroom specialist, is the latest retailer facing a financial crunch, putting hundreds more high street jobs at risk.
Advisory firm BDO has been lined up to handle a potential administration after the loss-making business failed to find a buyer. It is understood that the group’s owner is unwilling to put in more cash to save the business ahead of this month’s rent day.
The chain has 168 stores and about 700 employees. It is based in Welwyn Garden City, has been owned by the American billionaire Warren Stephens since 2014, when he backed a management buyout.
The company was founded in 1990 by Patrick Riley and Nico de Beer who opened the first shop in Croydon. In 2003 it was sold to the builders’ merchant Wolseley which during almost a decade of ownership expanded its store network from 33 to 170 stores.
In 2012 Wolseley sold Bathstore to the private equity firm Endless in a £15m deal but the company changed hands just two years later when it was acquired by the Stephens investment firm.
The last set of accounts filed at Companies House show the retailer making a pretax loss of £22m on sales of £141m in the year to 31 July 2017. The scale of the loss reflected £11m of exceptional costs which included a £5.4m write down on the value of its stores and leases. Industry sources said recent results had deteriorated further.
Bathstore’s chairman, Geoff Battersby, who joined the company in January 2018 after the period’s end, said the company had been hit by a marked reduction in consumer confidence in 2017 and increased sourcing costs following the devaluation of sterling in the wake of the 2016 Brexit vote.
The tough trading conditions had continued into 2018, when the company embarked on a turnaround plan to restore profitability. To support the business Stephens provided a £15m loan and extended the maturity of previous loans to the end of next month. It also installed a new chief executive.
The £1bn bathroom market is dominated by builder’s merchants and DIY chains. As with other home improvement businesses sales have been affected by the slowdown in the housing market and weak consumer confidence. Sales of big-ticket items have been particularly hard hit.
In common with other sectors, stores are also being affected by customers bypassing the showroom and buying online.
In March rival Better Bathrooms collapsed into administration with a loss of 325 jobs. The company blamed “severe cashflow difficulties” and poor sales. Last year the UK’s second biggest DIY chain, Homebase, said it was closing 42 stores as part of a rescue plan after it was sold for £1 to turnaround specialist Hilco.