May 21 2013 Latest news:
Wednesday, March 6, 2013
AROUND 400 jobs at beds retail chain Dreams are at risk following a rescue deal to lift part of business out of administration.
Administrators from accountancy firm Ernst & Young, who were appointed on yesterday, have confirmed the sale of the Dreams business and assets to private equity group Sun Capital Partners, which already owns sofas chain SCS Upholstery.
The sale, for an undisclosed sum, includes 171 out of Dreams’ network of 266 stores across the UK and has saved more than 1,600 jobs.
However, the future remains uncertain for the rest of the chain’s current 2,000-strong workforce, although the stores not included in the deal will remain open for the time being while the administrators continue to seek an alternative buyer for them.
A plan by Dreams founder and former chief executive Mike Clare, who sold the business to private equity firm Exponent in 2008 in a deal valued at more than £200million, to rescue the entire chain by buying back the business proved unsuccessful.
However, Mr Clare said today that he was now planning to launch a new bed retailing venture and remained interested in salvaging as many Dreams stores as possible.
Ernst & Young said in a statement that the sale of Dreams to Sun Capital Partners had secured new investment enabling the business to continue to operate as a going concern outside of insolvency.
The new owner would honour customer orders, where part payment deposits had been made for goods, and customer warranties.
Joint administrator Alan Hudson said: “High street retailers have faced unprecedented conditions over recent years, and the market for higher value discretionary purchases has been particularly tough.
“Dreams is a well known market leader, but in common with many others has suffered as a result of this depressed retail environment, a rapid expansion of its store portfolio and onerous lease liabilities.
“Whilst recent performance has improved, it has seen a decline in like for like sales across its store portfolio as well as its operating margins being squeezed. This has resulted in the business being unable to continue to operate outside of administration.
“However, we are pleased to announce that a sale has been completed that sees the majority of the Dreams business including 171 of its stores, its head office and its two UK manufacturing facilities being sold to a new company controlled by Sun Capital Partners.
“The business will continue to trade without interruption, over 1,600 jobs have been transferred and the future of Dreams on the UK high street has been safeguarded.
“The remaining stores that are not included in the sale will remain open for business whilst the Administrators seek to find buyers for these stores.”
Dreams’ network of stores includes two in Ipswich and others in Bury St Edmunds, Colchester, Braintree and Chelmsford. No details were immediately available of which stores are included in the sale to Sun Capital Partners.
Mr Clare, who worked for several furniture firms before setting up a sofa bed shop in Uxbridge, Middlesex, in 1986 and opening the first Dreams store a year later when he added beds to the range, said today he had been attempting to mount a rescue for the business since last autumn.
He expressed disappointment at the company’s collapse into administration but said he was now developing a new bed retailing venture “with the intention of it filling the vacuum the demise of Dreams will leave in the high street”.
Dreams is the latest in a sequence of high-profile administrations which have seen the closure of all Comet and Jessops stores and a number of HMV and Blockbuster shops.
Sun Capital Partners also bought fashion chain Bonmarche, which was part of the Peacock Group, last year after it collapsed into administration.
The US-headquartered firm has invested in more than 315 companies around the world since its was founded in in 1995.