Newsletter - Hilco Capital

Newsletter
Hilco completes acquisition of HMV
Hilco acquired HMV, the iconic British entertainment
retailer, from its administrators, Deloitte, at the end of
the first quarter. The high profile transaction concluded
several weeks of intensive negotiations with HMV’s
landlords and key suppliers to agree workable terms
and secure their support for the continuation of HMV as
a national high street retailer.
The company includes 141 stores across the UK, 25
of which had previously been slated for closure by the
administrators, together with all nine branches of Fopp,
the independent music store chain that HMV acquired
out of administration in 2007. Additionally, talks are
underway to re-establish the business in Ireland.
The purchase of HMV follows
Hilco’s acquisition of HMV Canada
in June 2011. The 113-store
Canadian business has performed
strongly following the successful
implementation of a turnaround
strategy that saw the retailer
update its strategies around
product mix and promotions,
rightsize its store portfolio, revitalise
its loyalty scheme and launch
digital music download and
streaming services. Hilco CEO
and HMV Chairman Paul McGowan commented: “The
structural differences in the markets and the higher
level of competition in the UK will prove additional
challenges for the UK business but we believe it has a
successful future ahead of it.”
The initial focus of the HMV and Hilco teams will be
on stabilising and rebuilding the business following
the disruption of the three month long administration.
However, in parallel, plans are underway for HMV to
relaunch to the public later in the year with, in the
words of HMV’s temporary website, “a new website
and digital services, a rebooted Pure rewards scheme
and a fresh approach to [its] stores”.
The Best of British gift fit for a world leader
Schloss Meseberg, the Chancellor’s rural retreat.
The Prime Minister presented Mrs Merkel with a tea
set in Denby’s Halo design (pictured) which has been a
huge success since its launch in autumn 2010.
Prime Minister David Cameron chose Denby’s premium
British-made pottery as the perfect gift for Angela
Merkel, the German Chancellor, on a recent visit to
Germany is a key export market for Denby with the
pottery’s high quality tea pots proving particularly
popular. Further afield, Denby’s sales to the Far East
have grown by over 300% in the last four years and
in 2012, Denby started exporting its Derbyshiredesigned and made ceramics to China.
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Newsletter Q1 2013
Hilco helps Dragon
to rescue Jessops
Hilco helped entrepreneur Peter
Jones to acquire camera retailer
Jessops from its administrators
in March. Subsequently, Hilco
supported the Dragons’ Den star
as he established a new company
to take the Jessops business
forward both online and on the
high street. All of us at Hilco wish
Peter and the Jessops team the
very best in this exciting venture.
Hilco’s ongoing involvement with
Jessops is solely focused on the
relationship of the Jessops brand
with CeWe, the award-winning
online photo printing service.
CeWe powers Jessops Photo, the
online digital photo printing service,
making it exceptionally quick and
easy to create professional quality
books, prints, wall art and gifts
from your digital photos. To find
out more and take advantage of
exclusive Hilco discounts, head to
photo.jessops.com and use the
following voucher codes:
HILCOART33 for 33% off wall art
HILCOXL33 for 33% off large or
extra large photobooks.
Each code can be used once per
person before 31/5/13.
Newsletter
Hilco UK launches
Re:Capital brand
While the global Hilco Organization
has long been active in both
Canada and Australia, primarily
as a provider of valuation and
liquidation services, the Hilco UK
team has only been acting in
these Commonwealth countries
for the last couple of years. In
Canada, Hilco UK has successfully
led the turnaround of both HMV
Canada and the Kraus Group of
companies, the latter being one
of the largest operational and
financial turnarounds of a Canadian
company in recent years.
Hilco UK has created an entirely
new brand to represent our
activities in these countries:
Re:Capital. Embodying
restructuring, refinancing, financial
re-engineering and renewal,
the Re:Capital brand distils the
essence of Hilco UK’s operations in
Canada and Australia into a strong
and memorable new name.
The launch of Re:Capital will be
celebrated in style with exclusive
events in Toronto in May and
Sydney in June. For more
information, please contact:
Re:Capital Canada
chris.emmott@recapglobal.com
Re:Capital Australia
james.turner@recapglobal.com
2 Hilco Newsletter Q1 2013
New Kraus chief to accelerate turnaround
Kraus Group announced
the appointment of
a new President and
CEO in March. Steve
Malinowski (pictured)
joins the Canadian
carpet manufacturer
from frozen food
producer Janes Family
Foods where he oversaw
a successful turnaround of the company that saw it
go from seriously underperforming to winning awards
within the first year of his tenure.
At the same time, Hilco’s specialist manufacturing
turnaround team, led by Hugh Whitcomb, has made
significant progress in improving the efficiency of the
company’s 850,000 sq ft fibre extrusion and carpet
production facilities in Waterloo, Ontario. Annualised
cost savings of $1.65 million have already been
achieved with a further $450,000 of initiatives
identified and in progress, while production output
has increased by 8% year-on-year. Manufacturing
quality performance has continued to improve with the
amount of seconds produced reducing from 2.91%
for the same period in 2011 to just 1.18%, well above
industry averages.
With an extensive track record in operational
turnaround in the manufacturing sector, Steve is ideally
placed to accelerate the momentum that the Hilco and
Kraus teams have already created.
With the recovery of the US housing market continuing
to gather pace, Kraus is now in a strong position to put
the troubles of recent years behind it and, in its new
chief executive’s words, “return to its former glory”.
HMV Canada keeps customers appy
HMV Canada ended the quarter with another solid set
of results as the company achieved sales 4% ahead
of plan for the month of March and saw its share
of the physical audio market rise to 38%, a 3.7%
increase on the prior year. A strong
new release schedule and effective
back catalogue multi buy promotions
drove a year-on-year conversion rate
improvement.
The retailer completed the relocation
of its stores in Place Laurier in
Quebec City, Coquitlam in British
Columbia and the Edmonton
and Calgary stores in Alberta
as part of the ongoing
strategy to rightsize its store portfolio.
HMV Canada’s relaunched Pure loyalty scheme
continued to show strong growth with in store
activations exceeding 90%.
In the digital arena, HMV Canada’s music download
and streaming service, The Vault, progressed from beta
to full release at the end of March, with a catalogue of
15 million titles, putting it on a level playing field with
the biggest streaming services in the market.
The full release of The Vault includes mobile apps
for the iOS and Android platforms, providing
subscribers with streamlined interfaces for on-thego access and offline listening.
At the time of going to press, the
HMV Canada team were preparing
to play a key role as a headline
sponsor of the JUNO Awards,
Canada’s equivalent of the Brit Awards.
The high profile ceremony, hosted by Michael Bublé,
celebrates the best of Canada’s musical talent with
Carly Rae Jepsen, Justin Bieber, The Weeknd,
Leonard Cohen and KD Lang among the internationally
acclaimed Canadian artists nominated for awards.
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Newsletter
Axminster Carpets rescued Blockbuster closes UK stores
Hilco invested in Axminster Carpets,
the carpet manufacturer based in
the Devonshire town from which
it takes its name, earlier this year
in order to provide the company’s
owners time to assess their options
to save the troubled business.
The firm, established
in 1937 to bring
production of carpets
using the famous
Axminster weaving
technique back to the
town where the process
originated in 1755,
produces domestic and
commercial carpets for
customers including
Buckingham Palace, British Airways
and John Lewis.
The company was sold in March as
a going concern to a consortium of
local business people, securing the
future of the Axminster brand.
Following the insolvency of
Blockbuster’s UK business, the
company’s administrators, Deloitte,
appointed Hilco to manage the
store closure process in a number
of the DVD rental specialist’s
Oceans headlines the Ideal Home Show
locations during the first quarter.
In total, Hilco’s Retail Agents team
operated closing down sales in
242 Blockbuster outlets across
the UK.
Clipper launches
charter service
public appearance and to mingle with the crowd.
Oceans Rattan Furniture, the premium
outdoor furniture specialist, was a
headline sponsor of this year’s Ideal Home Show
which took place at London’s Earls Court in March.
Oceans has exhibited at the event for several years
and expanded its presence this year with the high
profile sponsorship which saw Oceans host the show’s
Gardens area and Love Your Garden tea room while
veteran gardening journalist and broadcaster, Alan
Titchmarsh (pictured), joined the Oceans stand for a
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The start of the year has been
particularly challenging for the
outdoor furniture sector in the
UK with a spell of unseasonably
cold weather continuing into
springtime. Presciently, Oceans
chose to launch its new heated
seating range at the Ideal Home
Show while snow fell outside. The
innovative range brings Heated
Outdoor Furniture technology to
the UK for the first time and is available as an option
across Oceans’ entire seating range.
The low voltage system warms seat cushions up in less
than two minutes and is more effective at keeping the
whole body warm and much more economical and
environmentally friendly to operate than gas or infrared
patio heaters.
Clipper Marine has launched a
new yacht charter service for
2013, offering the private hire or
corporate charter of the luxurious
new Bavaria 40 Sport on the
Hamble at the heart of the Solent.
Starting at just £500 per day, the
service is cost effective for team
building events and corporate
entertaining for up to eight guests.
For more information and an
exclusive Hilco discount, please
call the team on 02380 605060.
Hilco Newsletter Q1 2013 3
Newsletter
1927 wins new distribution contracts
Twice2much kicks
off logistics review
Spanish fashion brand Desigual is the latest major
fashion brand to sign a distribution deal with designer
fashion wholesaler 1927. Desigual, known for its
bold patterns and attention-grabbing PR stunts was
established in Barcelona in 1984 and has flagship
stores around the world.
Builders’ merchant Travis Perkins
has appointed Twice2much to
conduct a logistics review. The
process has already identified
£100,000 over overcharges in
the first year of data analysed. A
similar review for a freight company
recently recovered over £180,000
of spurious charges.
1927 is also working with the Vince Camuto Group
to distribute footwear from its BCBGMAXAZRIA and
BCBGeneration labels
across Europe.
The company has also
added footwear from
Guess and up-andcoming Australian brand
Senso (pictured) to its
roster of labels.
NEWS FROM ACROSS THE POND
Hilco Consumer Capital completed the sale
of the Ellen Tracy and Caribbean Joe fashion
and lifestyle brands to Sequential Brands Group
in March. The purchase price of the transaction
was comprised of $62.3 million in cash and
approximately 2.8 million shares of common stock
of Sequential. The deal takes Sequential’s portfolio
to six brands with 50 licensees and an expected
run-rate of close to $1 billion in global retail sales.
Hilco Consumer Capital also took the
redevelopment of the Halston designer fashion
business to the next level with the opening of the
first standalone store for the Halston Heritage label.
The 4,400 square foot flagship store on New
York’s Madison Avenue is the first in a series of
boutiques scheduled to open in 2013.
Hilco Merchant Resources has been engaged
Twice2much wins major
Travis Perkins Group contract
Twice2much has been appointed to conduct
rebates reviews for the entire Travis Perkins
group of companies. The building and home
improvement group includes Travis Perkins,
Wickes, BSS Industrial, Keyline, Toolstation, City
Plumbing Supplies and Tile Giant among its
many subsidiaries.
The appointment sees Twice2much replace a
much larger competitor on the project.
to manage the liquidation of $7 million of inventory in
22 CCS retail locations. CCS, a Foot Locker subsidiary,
is a retailer of skateboard equipment, apparel, footwear
and accessories.
executive at Office Depot and PWC Consulting and
brings substantial retail experience and innovative
retail client solutions to Hilco’s retail consulting
practice.
In Canada, HMR has been appointed to liquidate
$19 million of inventory in 62 retail locations for
The Bargain! Shop and $18 million of inventory for
Effigi, a Quebec-based retailer of fashion and home
decor with 9 retail locations. HMR and Hilco Fixed
Asset Recovery continue to manage the disposition
of inventory, fixtures and equipment at Zellers stores
throughout Canada. When completed, the sale will
have included over 270 Zellers stores comprising
more than 21 million square feet of retail selling space.
Hilco Real Estate has been appointed to sell the
0.86 acre former Hostess Brands/Wonder Bread
distribution centre in Fredericksburg, Virginia. Other
upcoming real estate auctions to be managed by
the company include a prime 84 acre development
site in Elizabethtown, Kentucky and two 60-room
hotels in Mobile, Alabama.
Farla Efros, the former Executive Vice President of
Office Depot, has joined SD Retail Consulting as
Chief Operating Officer. Farla spent many years as an
Hilco Receivables is Hilco’s latest new business
unit. The company, led by Jay Stone, has a broad
range of specialities in the Accounts Receivable
Management industry including the management
of commercial accounts receivable portfolios and
the purchase of nonperforming loans.
MIG builds on construction sector expertise
MKM Building
Supplies, the
UK’s largest
independent
company
providing a one
stop shop for
building, timber and plumbing supplies to the
construction industry, is the latest business
in building-related markets to appoint the
Marketing Innovation Group to work on its data-
driven marketing strategy.
MIG has been tasked with consolidating MKM’s
customer data into a single customer view,
developing a customer journey and devising
a lifecycle marketing model. This will result in
segmented and highly targeted communications
activities across various channels including
email, SMS and direct mail, with the single
clear aim of increasing sales through improved
customer engagement.
Published by Hilco UK Limited, 80 New Bond Street, London W1S 1SB · Tel (0)207 317 2050 · Fax (0)207 317 2051 · © 2013 Hilco UK Limited · All rights reserved
4 Hilco Newsletter Q1 2013
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