Relevant Document:FY’20 Results
Sun Capital has hired DC Advisory to sell U.K. retailer Sharps Bedrooms, sources told Reorg. Private equity investors and direct lenders have been informally approached ahead of the auction which is expected later this year.
Sharps Bedrooms is being marketed with an EBITDA of £20 million and is aiming to reach a valuation of 8x. Sources, however, commented that a multiple of 6x seemed more likely. The retailer’s high capital expenditure requirements and existing debt levels may prevent it from reaching higher multiples, sources added.
The high capex needs stem from furniture manufacturing costs and lease expenses for warehouses, showrooms and distribution vehicles, sources said. The group’s debt comprises a
€60 million Nordic bond due July 2022 and the retailer will look to refinance this as part of the transaction, sources told Reorg.
Sun Capital is hoping to capitalize on the improving performance trends in the homeware sector through the Sharps Bedroom sale, sources commented. Sun Capital recently
sold mattress retailer Dreams for $475 million, which it acquired out of administration for £1 in 2014.
The company reported a 16.7% year-over-year decrease in revenue to £87.9 million for 2020, due to a loss of trading in the first Covid-19 related lockdown. EBITDA dropped 5.6% year over year to £17.4 million.
The wardrobe specialist suffered a drop in earnings last year during the March to May lockdown when it was forced to halt trading. It said in its report that since the first lockdown it has experienced an increase in demand as consumers switch discretionary spend from holidays to home improvements.
Founded in 1973, Sharps Bedrooms designs, manufactures and installs fitted bedrooms and home office furniture in the U.K. It has approximately 70 showrooms across the U.K. as well as an online presence.
DC Advisory and Sun Capital declined to comment.
--Lara Gibson
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