The new chairman of TJ Hughes has refinanced the discount department store business and set out to address its sourcing strategy after soaring costs and slumping margins drove the business to the brink.
Anthony Solomon, who together with turnaround investor Endless, has ploughed an undisclosed amount into the business for a “significant” stake. He said TJ Hughes had suffered from sourcing through exporters in the Far East rather than directly.
Despite a strong performance in the year to January 30, 2010 - when profits rose by 29% to £6.8m and sales increased by 2% to £266.7m - Solomon said the business had “gone significantly downhill” in the year ended January 2011.
Management positions at the business were “under review” he said, adding that the deal was a joint venture between Endless and himself, not a management buyout as originally reported.
Former Etam chief executive Beatrice Lafon took up the role of chief executive in January after Sue Tennant stood down in December.
Solomon declined to provide details of the TJ Hughes refinancing but said: “The first job is to renew the cost base of the business and get great product on the shelves.”
There will be a review of the supply chain, which will be headed up by his long-term business partner David Luper.
He said the 57-store business had no plans to close shops and wants to expand after getting 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 alongside Endless. In 2008, they bought discount bookseller The Works out of administration a year after a similar acquisition of value retailer and wholesaler JTF. He was previously the majority shareholder and chief executive of department store The Original Factory Shop, which he sold to Barclays Private Equity for £40m in November 2004.