Links of London sales rise, owner mulls sale rather than CVA
today Apr 23, 2019
It's now more than a month since Links of London was reportedly close to collapse and was said to be mulling a company voluntary arrangement (CVA) to help it survive. But now a report has emerged that its owner, Greek jeweller Folli Follie, is trying to find a buyer for the chain.
The company, which has been faced with the same headwinds that have battered many other UK retailers (high rents for its shops and extreme consumer caution) has seen improving sales recently. This could make it more attractive to a prospective buyer and mean that the unpopular CVA approach could be avoided.
The Telegraph reported that Links management is working with advisers at Deloitte on its options following a 3% increase in like-for-like sales in the year-to-date. That may not be a huge percentage, but it's the first growth the company has seen in three years.
It seems its radical turnaround plan, initiated six months ago and led by new CEO Annia Spiliopoulos, seems to be yielding results. The strategy has included the company moving its HQ back to London, culling as many as 85 jobs and closing 15 shops in the US.
It has also struck new, more favourable, contracts with its suppliers, relocated some stores and merged its marketing teams. In total this has allowed it to save £5 million a year with a further £2 million one-off saving.
In normal circumstances, Folli Follie might have been prepared to continue supporting the company and to see it through its turnaround. But the parent firm has itself being hit by financial problems with an accounting scandal after it was discovered that it had overstated its Asian sales by as much as 90%. That meant the $316 million profit it had reported for 2017 should actually have been a $45 million loss.
The company has been hit with a multi-million euro fine as a result by the body that regulates the Greek stock market and its founders have also seen criminal charges filed against them. It's currently working on new financing and so the problems at Links are a distraction that it really doesn't need at the moment.
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