Iconic high street retailer Woolworths has widened talks aimed at saving it from collapse. The 99-year-old group said it was in talks to sell its 40 per cent interest in DVD publishing business 2 Entertain to joint venture partner the British Broadcasting Corporation. It remains in talks to sell its retail chain to restructuring specialist Hilco for a nominal sum. Trading in shares of the struggling sweets-to-DVDs retailer were suspended today while talks continued. The 99-year-old group confirmed it remains in discussions regarding the potential sale of its 800-store retail business to restructuring specialist Hilco UK for a nominal sum. Woolworths said it is also in talks with the BBC regarding the possible sale of its 40 per cent interest in the 2 Entertain DVD publishing joint venture with BBC Worldwide, the broadcaster's commercial arm. A British newspaper reported that the BBC has agreed in principle to pay more than £100 million (Dh562.80) for Woolworths' stake. "Whilst discussions in relation to such sales are being pursued with vigour terms have not yet been agreed," the group said. "Both sales are subject, amongst other things to the approval of the group's lending banks (Bank of Ireland division Burdale and GMAC). Accordingly, there can be no assurance that a sale of the group's retail business or of its interest in 2 Entertain will be concluded." Woolworths added that pending the outcome of the talks and the consequent impact on the company's financial position it requested a suspension in the trading of its shares. The sale of both the retail business and the 2 Entertain holding would leave Woolworths with only a profitable distribution business. Burdale and GMAC lent the group 385 million pounds in January. Hilco's proposal would see it buy Woolworths' retail division for 1 pound and take on about 300 million pounds of the group debt. If they decide not to approve the sales analysts expect Woolworths' board will place the entire group into administration, threatening the jobs of 30,000 employees. Ardeshir Naghshineh, Woolworths' largest shareholder with a 10.2 per cent stake, said on Monday the retailer should not be forced into administration but should continue as a going concern.
The Group * Woolworths employs about 30,000 people in three businesses: an 815-store retail chain; a DVD publishing joint venture with BBC Worldwide called 2 Entertain; and EUK, a distributor of music, DVDs, games and books. The group made an adjusted loss, excluding profits from property transactions, of 90.8 million pounds ($139 million) in the first half of its financial year, which ended on Aug. 2, compared with a loss of 64.3 million in the same period last year. First-half sales were down 3 per cent at 1.1 billion pounds.
In the year ended Feb. 2, the group made an adjusted profit before tax and one-off items of 28.3 million pounds on sales of 2.97 billion pounds. The shops * Woolworths retail business employs about 25,000 people. It is Britain's biggest seller of sweets and has top five positions in toys, children's clothing, homewares and entertainment products. Its brands include Ladybird clothes and Chad Valley toys.
The retail business made a first-half adjusted operating loss of 69.5 million pounds on a 5 per cent drop in sales. The DVD publishing business * Woolworths has a 40 per cent share in 2 Entertain, a DVD publishing joint venture with BBC Worldwide, the commercial arm of the state-funded broadcaster. Recent titles include Walt Disney's "Enchanted" and "The Simpsons" movie. Sales at 2 Entertain rose 23.5 per cent in the year ended Feb. 2, while dividends from the joint venture increased by 59.5 per cent to 18.5 million pounds.
The distribution business * EUK is Britain's biggest distributor of entertainment products, covering music, DVDs, games, books and mobile phones. Products are supplied to major store groups and online retailers. Sales rose 36.6 per cent to 1.18 billion pounds in the year ended Feb. 2, though profitability was held back by a major programme to broaden its product categories and customer base.
The history 1909 F.W. Woolworths, a subsidiary of its US parent, is founded in the UK. The first store opens in Liverpool. 1982 Bought by retail conglomerate Kingfisher for 300 million pounds. 2001 Woolworths begins trading as a listed company after its demerger from Kingfisher Plc. The shares debut at 25 pence apiece, giving a market value of 350 million pounds. June 18, 2008 Woolworths says it has asked Chief Executive Trevor Bish-Jones to step down as it unveils a deterioration in sales and profit margins.
Aug. 12 Company names Steve Johnson, former chief executive of home improvements group Focus DIY, as new CEO. Oct. 27 Bank of Ireland BOI. L division Burdale Financial and GMAC Commercial Finance, which together lent Woolworths 385 million pounds in January, appoint Deloitte to represent them in talks with the group over its future. Nov. 19 Woolworths says it is talks to sell its retail chain to restructuring specialist Hilco for a nominal sum.
Nov. 26 Company says talks with Hilco continue and that it is also in talks to sell its 40 per cent stake in 2 Entertain to the BBC. Woolworths shares suspended at 1.22 pence, valuing the equity at 18 million pounds. * Reuters