Wed 07/14/2021 10:30 AM
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U.K. furniture retailer Loaf is struggling to attract private equity buyers after launching a sale several months ago, sources told Reorg.  Continue reading for our EMEA Middle Market team's reporting on a potential sale of Loaf, and request a trial for access to reporting and analysis on hundreds of stressed, distressed and performing credits. 


The family owned retailer hired Grant Thornton to explore a sale after it performed strongly during the Covid-19 crisis and benefited from a surge in home-improvement spending, sources said.


Grant Thornton is attempting to sell Loaf for a valuation of £70 million, sources said. Private equity investors felt the valuation aspirations were too high and did not feel comfortable with Loaf’s capex-heavy business model, they added.


Sources also raised concerns about Loaf’s high manufacturing costs and low profit margins. Loaf manufactures a substantial percentage of its furniture in the U.K. and many products are made individually for customers based on their requirements, further raising costs.


In the year ended March 2020, Loaf’s sales increased 6% year on year to £51 million and underlying EBITDA rose to £5 million from £4.4 million a year earlier. Loaf said the rise in EBITDA reflected operational efficiencies, overhead cost management and a focus on developing a strong brand message.


In April this year, the retailer secured a debt facility from Barclays to address its working capital needs.


Loaf was founded in 2008 by current owner Charlie Marshall. It designs, manufactures and sells home furniture sold to customers through its online platform and eight showrooms.




Grant Thornton and Barclays declined to comment. Loaf did not respond to Reorg’s request for comment.

--Lara Gibson

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