Fresh crisis in store for upmarket food chain

Financial review launched at Booths, as family-owned northern supermarket chain struggles with debts

THE family behind upmarket grocer Booths could be forced to pump more money into the business in order to retain control over it.

The chain, nicknamed “Waitrose of the North”, is facing a forensic review of its finances amid concern that the company has become overstretched.

Royal Bank of Scotland and HSBC, the company’s senior lenders, have instructed accountants Grant Thornton to undertake a so-called Independent Bank Review.

An IBR can often lead to the owners of a company having to make a one-off cash injection to retain independence or the banks eventually taking control. It was ordered after Booths came close to breaching the terms of its loans.

The move is a severe blow to Booths, which has not yet recovered from the severe damage wrought by floods in parts of the North two years ago.

The chain, which has 31 shops dotted around the North West, tumbled to a £6.3m loss in 2016 compared to a £1.1m profit the previous year. Devastating floods in December 2015 wreaked havoc with sales and resulted in the closure of its Keswick store. The shop ended up under water after a breach of flood defences in the Cumbrian town.

Management complained that sales also suffered due to the competitive market and deflation which “has plagued our market”. Family members responded to the crisis by installing themselves at the top of the 168-yearold company in an effort to oversee a quick turnaround. Edwin Booth, a fifth generation family member, has taken on the dual role of chairman and chief executive after Chris Dee, the previous chief executive, left abruptly in May following 22 years of service.

A layer of senior management has been removed, which resulted in £1.6m of one-off costs but is expected to save £2.6m a year. The changes led to 100 job losses, although new openings in Barrowford and Hale Barns are said to have created around 400 new full and part-time positions.

It has also launched an online gift business and struck a deal to sell products in 20 shops in Malaysia to cash in on an appetite for British heritage brands.

However, in an interview with The Sunday Telegraph earlier this year Mr Dee said that he did not expect an improvement on last year’s results due to intense competition from larger rivals.

Retail industry sources claimed that the complicated family-ownership structure of Booths might make it harder to solve its problems. Different factions of the family, who have descended from founder Edwin Booth, own around 96pc of the company. The rest is owned by staff.

Despite difficult trading last year and expressing concerns about the “spending power of consumers in the North West” following Brexit, the retailer still paid out a dividend of £288,762 to its main shareholders, including Edwin Booth, the chairman.

Grant Thornton declined to comment while a Booths spokesman said: “We do not comment on our banking matters or any advisers we use.”