Discount retailer The Works is reportedly planning to enter the stock market with a £100m listing giving its private equity owners and management a £36.7m payout.
In contrast to many other struggling high street chains, Kevin Keaney, c.e.o., said that the the cut-price books, crafts and toys chain would open 50 more outlets a year because the market was “crying out for a really family-friendly retailer”, according to the Guardian,
The Works said it had set its initial share price at 160p, equating to a market capitalisation of £100m when the 447-strong retailer joins the stock market on (Thursday) 19th July. The offer will raise £65.2m, of which £28.5m will go towards mostly paying off debts, while £36.7m will go to shareholders.
“Undoubtedly there are tough times but really well-run discount retailers like B&M, Primark, Home Bargains and ourselves are doing really well … our whole strategy is to take money away from full-price specialists like W H Smith with disruptive pricing,” Keaney said.
Chairman Dean Hoyle, who owns Huddersfield Town FC and founded the Card Factory, is set to make £1m by selling shares. Already worth £350m, he will reportedly also retain a 14% stake worth a further £14m at the float price.
Endless, the private equity firm which owns the chain, is selling shares worth £30m and intends to retain a 10% stake worth £10m. The venture capitalist company, which also owns a stake in The Book People, bought a majority stake in 2015.
Retail analyst Nick Bubb, told the Guardian he was surprised that The Works had been able to finalise its initial public offering, first suggested in the spring.
“We had assumed the IPO [Initial Public Offering] dream had died, in the face of the gloom about the high street and the demise of Poundworld,” he said, referencing the beleaguered chain which announced last week closure of a further 80 stores.
Keaney, who joined The Works in 2012, said the retailer was showing it was possible to sell online and on the high street as a discounter.
Sales of items ordered online but picked up in stores have risen by 60% in the past year, helping draw in new customers, according to Keaney. The company also used a loyalty scheme to reduce marketing costs and is able to change its product ranges quickly.
This summer it has given 20% of its shop floor space to "summer toys", double the usual amount, helping it to maximise sales during the heatwave.
“We are absolutely different. We have been bucking the market for some time not just in our performance but in the way we are doing things,” Keaney said.
The news follows the company’s strongest ever Christmas trading performance, with total sales up 15% in the 12 weeks to 24th December.
Like-for-like sales at the retailer meanwhile were up 6.3% in the 12 weeks to 24th December 2017, while e-commerce sales were up 37% like-for-like, accounting for 10% of the total turnover for the quarter.
It was announced last year that following a £5.3m investment in its 2017 store expansion programme, The Works plans to open a minimum of 50 new outlets in 2018, as well as exploring new store formats following the opening of 60 new stores in 2016.
The retailer began in 1981 as a discount bookstore, Remainders limited, before rebranding as The Works in 2003. Its headquarters is based in Sutton Coldfield, where it operates a store support office and national distribution centre.