MFI says has received approaches for retail arm |
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Sat, 20 May 2006 14:10
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LONDON - MFI Furniture Group PLC revealed today that it has received many approaches for its UK retailing arm and that it was considering them as a part of its turnaround plans.
"We have received expressions of interest for all or part of our retail business from a number of third parties, and we are in the process of evaluating this interest in the context of our developing plans. We will give an update on all these activities when we announce our 2006 interim results at the end of July," the group's Chairman Ian Peacock said in a statement.
These tentative offers come in the wakes of a massive sales slump at the retail stores since Boxing Day. Sales have plunged by 19 percent and a further 16 percent on a like-for-like basis. MFI is in the process of restructuring and had announced 1,500 job losses in February. But MFI's Howden joinery business is doing well and has reported increased sales to the tune of 12 percent. "As a consequence, we expect that Howden UK's total sales for the first half of this year will be similar to the same period in 2005," said Mr Peacock.
MFI shares surged by 18 percent on takeover speculations. "This will certainly get the shares excited today, although any break-up of the business will not be straightforward, given that Howden and UK Retail still share a lot of manufacturing capability and there is also a 150 million pound ($283.2 million) pension deficit to be factored in," said Steve Davies, an analyst with Numis.
MFI's new chief executive Matthew Ingle who replaced John Hancock in October last year has embarked on a massive restructuring drive. He said today that the board was still in the process of reorganization and would consider selling the retail division. It is reported that possible interested parties include Kingfisher PLC's B&Q and GUS PLC's Homebase.
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MFI to shed 1,470 jobs, close down 11 stores 