Upmarket food specialist Abel & Cole has parachuted in turnaround specialist Ian Gray as chairman and its founder has returned to run the business after the recession hit growth.
The home delivery specialist, which private equity firm Phoenix Equity Partners bought into in a 2007 deal valuing it at about £40m, has initiated changes to put it back on track including, it is understood, a debt-for-equity swap.
Company doctor Gray has previously advised many retailers on turnarounds, including Robert Dyas, and joined Abel & Cole’s board a month ago.
Founder Keith Abel has taken over day-to-day management after a two-year break from operational involvement, replacing chief executive Stephen Richards.
Abel & Cole delivers boxes of organic food to customers in London, the Midlands and the Northwest, but its growth rate fell when spooked consumers put their personal finances ahead of their principles as the downturn bit.
The retailer’s profits slid 7% to £1.5m in the year to August 31, 2008, when sales rose 21% to £33.7m. Other retailers of organic food also suffered. Whole Foods UK, for instance, made a loss of £36m in its last reported year.
However, Abel said that growth is being delivered again. The average basket size is up 9%, the retailer attracted 2,200 new customers last month alone and it is making about 40,000 deliveries a week.
He said: “Abel & Cole is alive and kicking. I’ve come back to reinvigorate things. It has been a tough couple of years for the independent sector but we are profitable at every level.”
Abel would not comment about any debt-for-equity swap but said that the stake sale in 2007 was financed at the height of the boom and that investors, including himself, have agreed measures to strengthen the balance sheet and have “taken a bit of a hit” as a result.
The organic market is estimated to be worth £2.1bn. However, a study last year by trade body IGD found that 10% of consumers had switched to cheaper products that they thought provided the same benefits and 8% said they were no longer sure what organic stands for.