May 11, 2020
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Office shoe chain sale chances recede - report

May 11, 2020

There are doubts around the potential for the footwear chain Office to find a buyer as private equity investors have reportedly stepped back from making firm bids.

Will the Office footwear chain sale process be cancelled?

The 100-store chain, which has been through a difficult period in recent years, is owned by South African retail giant Truworths and it had been reported that the owner was seeking a fast sale.

However, private equity investors, including Aurelius, were understood to have shown early interest but to have cooled on the idea recently, the Telegraph reported. It also said that retail turnaround firm Alteri will not bid for the company.

Those two investment firms are known for specialising in the purchase of distressed companies and would therefore have been seen as likely bidders.

Truworths bought control of Office around five years ago in a deal valuing it at £256 million. But the combination of Brexit uncertainty since 2016, the move away from physical retail and, more recently, the coronavirus crisis, mean it's unlikely to be worth anywhere near that sum at present.

Sky News had said Truworths hired advisory specialist Alvarez & Marsal (A&M) to run the sale of the business.

But with the South African company having invested a large amount of money in the chain in recent years, a sale at a knockdown price might not be considered by the parent company. 

That was also the view taken by the owner of Oasis and Warehouse several years ago when Kaupthing rejected a bid believed to be around £60 million. The company had seemed to be justified in that approach as its turnaround slowly took shape, until the pandemic derailed it completely this year and it went from working out future plans to filing for administration within just a few weeks.

Looking back at Office, its prospects depend very much on what Truworths decides to do next. The Telegraph reached out to both A&M and Truworths for a comment but received no reply. 

Office is believed to have considered a company voluntary arrangement last year. But instead of this, the owner refinanced the company and said it would close unprofitable locations. In the year to July 2019, it saw its sales dropping by £13 million to £285 million, while its profits plunged by £10 million to hit £15 million.

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