COMMENT

29 October, 2010

Fightback after a year that shook the trade

A year to the day, do you remember where you were when news that First Quench had collapsed finally broke? Although it had become a regrettably sad case of when the death knell would toll, not if, the moment owner Vision Capital handed the keys to administrator KPMG was nevertheless a poignant time in the trade’s history. To mark the occasion, in this issue, we take an in-depth look at how its demise has impacted the sector and unpick some of the behind-the-scenes events which helped shape a new landscape – one that would have been unimaginable even two years ago.

You wouldn’t need to rewind the clock too far to return to the point when the Times listed Threshers as the 13th largest privately owned retailer in the UK, stating that 30 million British consumers could find one of its shop brands within a 10-minute walk. No wonder Vision Capital was sufficiently wowed in 2007 to pay £260 million for a 75% stake in it. Only the previous week, Pension Insurance Corporation had bought the whole business from Terra Firma, quickly bringing in Vision’s investment while it retained the remaining 25% share and an £85 million pension fund that was in deficit. Insiders say Vision’s masterplan was to transfer the pension fund over entirely to PIC, freeing it up to concentrate on the retail element, but regulators blocked the move.

That, coupled with some unforseen surprises, meant suddenly the big idea Vision thought it was buying into was in stark contrast to the reality of the situation. Ill-advised investments in IT that ran into millions, tussles with its delivery partner, unpleasant spats with disenfranchised staff that revealed an alarming internal divide, not to mention a string of outstanding debts amounting to £41 million – the catastrophes that followed are well-documented. Less well-known are talks plotting a management buy-out for around 250 profitable stores. Like the offers scores of suitors say were rejected by KMPG over the past year, the deal was never done, and we can only speculate how the market might now look if it had come to fruition.

However, the big question many in the trade would most like answered is what happened right at the end when Vision finally decided to pull the plug? And why at that particular moment? At the time there could only have been a handful of executives left in the boardroom and it’s a story that may never get told.

More concrete are the stories that have emerged in the past year as businesses have morphed to the changed dynamics. Former staff now buzzing from new ventures, suppliers seeing better profits, plus supermarkets, multiple specialists, independents and convenience stores reporting tangible uplifts. As Martin Swaine, head of the burgeoning Rhythm & Booze chain puts it, a year on, we’re looking at “a new land of opportunity”.




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