December 14, 2018
Sky reported on Thursday that TPG – the serial investor behind a number of consumer brands including Prezzo and Poundworld – was in talks to sell or merge major online bathroom retailer Victoria Plum to US investor Stephens inc, which owns UK retail chain Bathstore.
Russell Barnes, the MD of Brass and Clay, told kbbreview: “It’s not a total surprise that this highly-competitive, opportunistic, price-sensitive, heavily discounted internet trading business with escalating costs could mutate into a new physical form.
“I expect others will follow and they will still record losses.”
Meanwhile, kbbreview columnist Derek Miller, director at Scope Bathrooms in Glasgow, said: “The High Street has become a very precarious place this past year. It looks like the misery may be catching up with the volume end of the bathroom industry.”
Richard Hassell, director at Doncaster-based retailer More than Baths, predicted that this was a sign of things to come, with physical bathroom retail to trump internet bathroom retail within two years.
“Give it another 18 months and we shall see who comes out on top,” he said. “Online for bathrooms will die out.”
Paul Crow, kbbreview columnist and managing director at retailer Ripples, said: “Given Wickes’s problems and so on, I think we should all expect a domino effect with nationals suffering.
“Major manufacturers who supply those companies, European-based ones, are going to have to find alternative customers or further shrink themselves.
“While the market might be too small for these big companies to run independently, it is also usually bigger than the merged resulting company can support and therefore perhaps an opportunity for others to fill the void. Who knows?
“Maybe this is a great chance for us little independents who can offer a much more dynamic, personal and relevant service.”
TPG, one of the world’s biggest private equity firms, took a majority stake in family internet and mail-order business Victoria Plum in 2014 in a deal reported to have been worth about £200 million.
According to its latest accounts, sales at VictoriaPlum.com rose 9% year on year, from £57.6m in 2017 to £63m in 2018. Operating profit rose to £0.2m in 2018.
Since the purchase, TPG has invested heavily in the business, in its customer offering, website, and people, with several significant senior management appointments.
TPG has introduced manufacturer brands to complement the company’s own in-house branded products.
Patrick O’Brien, UK retail research director at GlobalData, said: “Bathstore has found the market very challenging. Its most recent accounts filed at Companies House indicate widening losses with lower gross margins reflecting an inability to pass on increased costs to consumers.
“The UK bathroom market has been difficult, and while Victoria Plum’s accounts indicate that its sales are growing rapidly, it is struggling to make a profit of any significance.
“Both companies will have struggled to improve profitability in 2018 given market conditions, with falling housing transactions and political uncertainty around Brexit discouraging big-ticket bathroom purchases.”
TPG, Bathstore and Bathstore owner Stephens Inc all declined to comment.
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