Patisserie Holdings enters administration

No comments

Patisserie Valerie owner Patisserie Holdings has entered administration after failing to secure financing.

The business, which narrowly avoided collapse last year thanks to a cash injection, tonight (22 January) called in KPMG as administrator.

Patisserie Holdings has been in talks with banks, but has been unable to renew its facilities, stating “regrettably the business does not have sufficient funding to meet its liabilities as they fall due”.

Chairman Luke Johnson has personally extended an unsecured, interest-free £3m loan to help ensure the January wages are paid to all staff working in the ongoing business, reported the company.

Patisserie Holdings employs around 3,200 staff and operates more than 200 sites: Patisserie Valerie (153 sites), Philpotts (22), Druckers (20), Baker & Spice (4), Flour Power City Bakery (1)

The loan will also be used by the administrators to keep as many profitable stores as possible trading while a sale process is undertaken.

It was financial intervention by Johnson that prevented the collapse of the business last autumn after a £20m black hole was discovered in its finances.

In recent weeks, non-exec directors Lee Ginsberg and James Horler have resigned from the Patisserie Holdings board.

Patisserie Holdings

Total number of sites: 206

Brands: Patisserie Valerie (153 sites), Philpotts (22), Druckers (20), Baker & Spice (4), Flour Power City Bakery (1)

Employees: 3,200

Food/drink split (2017): 57/43

Eat in/takeaway split (2017): 65/35

Turnover: £60.5m (six months to 31 March 2018)

EBITDA: £13.6m (six months to 31 March 2018)

HQ location: Birmingham

Key management: Stephen Francis, CEO; Luke Johnson, chairman

Operating model: Company has a vertical supply chain, producing goods in-house at seven bakeries and delivering them to stores. Since acquiring Patisserie Valerie, the business has expanded rapidly through acquisitions and openings to more than 200 sites. In its current financial year, it has been aiming to open 20 stores. Products are also sold online and through partnership with Sainsbury’s patisserie counters.

Timeline

1926: First Patisserie Valerie café opens in Frith Street in London’s Soho by Madame Valerie, to introduce Continental-style patisserie to the English.
1939-1945: Café destroyed by bombing in Second World War, and Madame Valerie opens new Patisserie Valerie on nearby Old Compton Street.
1945-2005: Patisserie Valerie grows to eight sites in central London.
2006: Luke Johnson’s private equity firm Risk Capital Partners backs acquisition of Patisserie Valerie by Patisserie Holdings.
2007: Acquires Druckers – Vienna Patisserie.
2009: Acquires Baker & Spice, which operates sites in London and Oxford.
2013: Acquires London-based organic bakery Flour Power City Bakery.
2014: Acquires the Philpotts food supply and café chain.
2014: Patisserie Holdings listed on Alternative Investment Market.
2016: Annual sales exceed £100m for the first time.
2017: Launches trial partnership with Sainsbury’s, selling branded products on 12 supermarket counters. Partnership is a success and has since been expanded to 70 stores.

2018

10 October (AM): Share trading suspended as company launches investigation into serious accounting irregularities. Chief financial officer Chris Marsh suspended.
10 October (PM): Winding-up petition filed at the High Court relating to £1.14m owed to HMRC by Stonebeach Limited, the company’s principal trading subsidiary.
11 October: Patisserie Holdings reports it cannot continue to trade in its current form without immediate cash injection.
12 October: Chris Marsh arrested by police and released on bail.
15 October: Share offer raises £15.7m to help Patisserie Holdings continue trading, while chairman Luke Johnson provides £20m in loans.
24 October: Stonebeach winding-up order is dismissed.
26 October: Chris Marsh resigns from finance director role.
15 November: CEO Paul May resigns. Stephen Francis, former CEO of pork producer Tulip, is appointed to the role.
December: Former Starbucks boss Rhys Iley appointed commercial director, and former Tulip MD José Peralta appointed director of food production and supply.

2019