Homeware retailer Dunelm Group has announced today (Monday November 28) that it has reached agreement to purchase the assets of the WS Group for £8.5m.
The WS Group consists of Achica, Worldstores and Kiddicare. It has annual sales of about £100m and has some 650 employees. WS Group management, including the founders, will continue to run the WS Group.
Achica is a members-only online store offering furniture, homewares and accessories, often at significant discounts to RRPs for limited periods through flash sales.
Worldstores is the biggest part of the WS Group and is one of the UK's largest online retailers of products for the home and garden. There are over 500,000 products on its site.
Kiddicare is a multichannel retailer, selling nursery supplies and merchandise for children and young families.
Dunelm chief executive officer John Browett commented: "We are excited by this opportunity to accelerate the growth of our internet operation, more than doubling its size, and enhancing our position as the destination homewares retailer in the UK, both online and offline.
“Between the store network, broad product range and strong brand that Dunelm has built - and Worldstores' extensive homewares and furniture offer and unique platform for next day delivery and flash sales - we will strengthen our leading position."
Dunelm added that it will also be able to improve performance by sharing product ranges, harmonising terms and extending the multichannel delivery proposition - the benefits of which are expected to be in the region of £10m per year over the short to medium term.
The company plans to inject up to £15m into WS Group to fund historic working capital and to manage disruption for suppliers and customers.
Dunelm will also pay about £3m of ancillary and transaction related costs which are expected to be identified separately in the Group's accounts.
The board expects that in Dunelm's financial year ending July 1 2017, from the date of acquisition, the WS Group will incur trading losses of around £5-10m.
In Dunelm's financial year ending June 30 2018, the first full year of ownership of the WS Group, it is expected that the WS Group will be at least break-even.
The acquisition is subject to each of the companies in the WS Group being placed into administration and Dunelm expects to acquire the WS Group businesses later today from the intended administrators, William Wright and Robert Croxen of KPMG LLP.
Dunelm bills itself as the UK’s number one homeware retailer offering over 26,000 products across more than 28 different departments. The business operates from over 150 out-of-town superstores, and provides multi-channel options through online, mobile, catalogue, telephone ordering and reserve & collect propositions.