On the evening of 14^th September, Burdale Financial Limited, a member of Bank of Ireland Group, marked the first anniversary of the appointment of administrators to Lehman Brothers with an event to discuss corporate growth, turnaround, decline and rebirth in the retail sector.

Held in the Drapers’ Hall in the City of London, the evening was attended by industry guests including retailers, private equity investors, equity advisers, turnaround and restructuring specialists, debt advisers and bankers.

The Drapers’ Company was founded over 600 years ago and from the outset it was a benevolent institution helping its members who fell into distress – a bit like an early turnaround fund – and entirely in keeping with the evening’s theme.

Dinner was followed by a panel discussion with: Luke Johnson (Chairman of Channel 4 Television and Risk Capital Partners) representing corporate birth; Ian Gray (Chairman of Robert Dyas and Scala, and a fellow of the Institute of Turnaround) representing turnaround; and Neville Kahn (Deloitte Reorganisation Services Partner) representing decline and resurrection.

Audience members were also asked to contribute their views on a number of key retail issues through an electronic voting system.

In summary the audience was bearish on the outlook for the economy. Less than 3 per cent thought that the economy would make a quick ‘V’ shaped recovery, compared to over 72 per cent who thought the recovery would be slow or very slow.

The audience was also conservative on investment prospects for the retail sector, with 57 per cent voting in favour of non-cyclical food grocers in comparison to homewares, DIY and electricals, which received a mere 7% of the vote. Interestingly the biggest threat to retail was seen to be the shift to new media and increasingly rapid changes in consumer tastes, with 57 per cent of the vote, in comparison to bureaucracy and red tape, which obtained 28 per cent of the vote.

Full results can be found below.

Dennis Levine, Chairman of Burdale Financial Limited commented: “On behalf of Burdale I would like to thank all of our guests for attending the dinner and contributing to our industry poll. In particular we were delighted to have the participation of such a distinguished panel of panellists, Luke, Ian and Neville, who generously shared their industry knowledge and insight to make it a truly enjoyable and informative evening for all.”

Question 1: Who do you think you are?
A. A retailer, private equity investor or equity adviser (29.5%)
B. A turnaround specialist (31.1%)
C. A debt advisor, banker (27.9%)
D. OMG, diary cock-up, I’m a week early for the BRC Dinner, LOL (11.5%)

Question 2: What shape’s your downturn?
A. “V” Shaped – A quick recovery (2.4%)
B. “W” Shaped – Bear market rallies (25.0%)
C. “Bath” Shaped – Slow recovery (46.0%)
D. “L” Shaped – An “L” of a long time (26.6%)

Question 3: Place your bets
A. Homewares, DIY, electricals – even a turkey can fly in a hurricane (6.5%)
B. Clothing, health & beauty – recession-chic to recovery treat (21.3%)
C. Food grocers – defensive, but big growth potential in non-food (56.6%)
D. Buying opportunity?? Bye bye retail shares……. (15.6%)

Question 4: Clicks or mortar, how would you grow?
A. Stores only – back to basics (4.9%)
B. Clicks ’n’ Mortar – a balancing act (54.5%)
C. Interweb only – an Apple in one hand, a Wang in the other – bliss! (24.4%)
D. You’d need your head examining to launch a retail business now (16.2%)

Question 5: What is a CVA?
A. Company Voluntary Arrangement (50.4%)
B. Creditors VERY Angry (16.3%)
C. Circling Vultures Attack (5.7%)
D. Created by Voracious Accountants (27.6%)

Question 6: How much is 114m sq ft?
According to Richard Hyman, UK retail has added a net 58m sq ft of space and the growth of online sales has added the equivalent of 56m sq ft – a total of 114m sq ft. To put this in perspective, that’s the equivalent of:
A. 7,350 Buckingham Palaces (17.1%)
B. 130 Millennium Domes (23.1%)
C. 1 Michael Jackson Neverland ranch (8.5%)
D. All of the above (51.3%)

Question 7: Finance for retail start-ups/ expansion/ turnaround plans is:
A. Rare as an investment banking bonus (18.1%)
B. Fairly scarce (37.7%)
C. Available at a price (43.4%)
D. As plentiful as the unsold books at a Katie Price book signing (0.8%)

Question 8: Credit where credit’s due
Bill Grimsey, CEO of Focus DIY, has said of the credit insurers that “they are fair-weather friends
who don’t go into enough detail, make unilateral decisions with short notice, and jeopardise
the future of businesses”. Do you agree with him?
A. Credit insurance is a fundamentally flawed business model (25.6%)
B. Well done Bill for articulating what others think (57.9%)
C. Credit insurers are doing a reasonable job in a tough market (13.2%)
D. KILL BILL….. (3.3%)

Question 9: Pre-packs, love them or loathe them
A. A useful tool to preserve some value when businesses are failing (43.3%)
B. Useful but possibly open to abuse in unethical hands (42.5%)
C. Evidence of crony capitalism (5.8%)
D. I’ve only come across pre-packs in IKEA (8.3%)

Question 10: Crystal ball time, the biggest threats to retail is?
A. Bureaucracy, red tape, working time directive etc (27.9%)
B. Hiring quality staff and young people (11.7%)
C. Minimum wage inflexibility (3.6%)
D. New Media - increasingly rapid changes in consumer tastes (56.8%)

The panel

Luke Johnson is Chairman of Channel 4 Television and Risk Capital Partners, a private equity firm. He was Chairman of Pizza Express during the 1990s and is currently an owner and Chairman of Giraffe restaurants and Patisserie Valerie, amongst other companies. He has also owned companies in recruitment, dentistry and retailing. For eight years he wrote a column on business in The Sunday Telegraph and now writes a weekly column for The Financial Times. After graduating in medicine from Oxford he worked as a stock broking analyst.

Ian Gray is currently Non-Executive Chairman of Scala Collections Limited, a mail order retailer of ladies apparel which operates under the brand names of Artigiano and Spirito. He is also a Non-Executive Director of Robert Dyas, where he recently led the Management Buy Out, and of The Kent Messenger Group. Ian is a Fellow of the Institute of Chartered Accountants and a Fellow of the Institute for Turnaround. Among his wide-ranging assignments, Ian’s boardroom experience includes numerous PLCs, and spans many different industry sectors including apparel, biotech, construction, distribution, electronics, engineering, FMCG, healthcare, leisure, manufacturing, media, retail, telecoms and travel. Ian Gray is a director of Baronsmead Consulting.

Neville Kahn is a Deloitte Reorganisation Services Partner and has over 20 years’ experience in restructuring. Neville has acted as lead insolvency practitioner on a number of complex administrations and receiverships, including Mosiac Fashions and Woolworths. He also has experience in strategic and financial business reviews, primarily focusing on developing strategies to protect and improve stakeholder positions. Neville is regularly engaged by debtors, senior and mezzanine lenders and opportunity funds. He has worked in this sector for the past 20 years, and more than 13 as a partner.

Submitted by Judith McMath - FCA, Director, Burdale Financial Limited

www.burdale.co.uk a member of Bank of Ireland Group

Image Copyright: Flickr

The views contained in this article are solely those of the author and do not necessarily represent the views of the Commercial Finance People