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The Works

 

Leading discount retailer of books and arts & crafts, comprising a chain of 260 stores throughout the UK.

Transaction Type: Turnaround

Status: Current

Sector: Retail

Investment Date: May 2008

Transaction Size: £17 million

Website Link: http://www.theworks.co.uk


Endless Contact: James Woolley

The Works logo

The Business

The Works is a leading discount book retailer comprising a chain of 260 stores throughout the UK. The business sells books, toys, gifts, stationery and arts & crafts at discount prices to consumers looking for “a bargain”.

This business model has also been successfully applied to short term tenancies on additional outlets during the Christmas period.

The Transaction

Endless acquired the business in May 2008, rescuing it after The Works had been in administration for over 3 months. This offered the best solution to the secured creditors of the group and also secured the future of the business and preserved over 2,000 jobs.

The Works had been subject to a leveraged buyout in 2005.  In the year leading up to the administration (January 2008) the business delivered an EBITDA loss of £4.7 million.

Value Creation

Thanks to the introduction of a new management team led by Anthony Solomon, The Works has re-established itself as the leading UK discount book retailer. This has been achieved by returning to the core principles of securing the best products at the best prices through the quality and flexibility of its supply chain and a lean operating base.

The business has succeeded in delivering strong profitability in-line with our investment plan and we would expect to see this continuing to improve over the remainder of the investment horizon. In February 2012, The Works was ranked 7th in the UK in the Buyout Track 100 League Table, which ranks the companies in private equity ownership with the fastest growing profits over the previous three years.

The Endless Difference

Despite the fact that The Works had been in administration for over 3 months, we strongly felt that there was a viable business which, with the right management team, could recover its position as a market leading discount book retailer.

Endless has a strong track record in partnering with banks to turnaround businesses and worked with HSBC on this transaction via a debt rollover and equity share structure. HSBC’s commitment to the business through the provision of a seasonal working capital facility, alongside further funding from Endless and the new management team, was essential to enable the business to re-stock following the administration and to deliver on our growth expectations.

The Works delivered an EBITDA of c.£3 million in its first year of trading post-administration, demonstrating a startling turnaround (to April 2009).  It is this performance that led the Institute for Turnaround to award Endless with the coveted “Financier of the Year” at its 8th Annual Turnaround Awards in December 2009.  By the year ended April 2011, EBITDA was in excess of £10 million per annum.

Testimonials

"I am delighted to have invested in The Works and excited about this opportunity. The business has great scope to restore itself to its historical success via its core markets. I see this as an excellent opportunity for David [Luper] and me to return to the retail sector."

Anthony Solomon, Co-Investor and Executive Chairman at The Works - Jun 2008

 

“Since acquiring The Works from administrators in May 2008 Endless has seen the business turn a pre-acquisition loss of c.£13 million [including exceptionals] into a £3 million profit in just one year, with a prospective profit in the second year of £6 million plus, saving over 2,000 jobs in the process. Endless has been a ‘name to conjure with’ virtually since they were founded, recently completing a £500 million turnover acquisition [of Sheffield based Vasanta] in less than 3 weeks.”

Christine Elliot, Chief Executive of the Institute for Turnaround - Dec 2009

 

“For The Works and Endless to be recognised at the Institute for Turnaround Awards - in the same week Borders has fallen into administration with commentators questioning whether there is a place on the high street for bookshops - is fantastic.”

Anthony Solomon, Executive Chairman of The Works - Dec 2009

 

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