Comet

Store closure programme with minimum guarantee (insolvent)

Transaction background

• Comet went into administration on November 2nd 2012, almost a year after private equity firm Opcapita had bought the business.
• With 235 stores and approximately of £135m of stock, Comet was the highest profile retail administration in the UK since Woolworths in 2008.
• GA Europe Valuations Ltd. previously provided inventory appraisal services to one of Comet’s previous lenders.
• Post-administration, GA Europe was appointed by Administrator Deloitte to manage the  business, with all fees heavily performance-based.

Operational details

• In addition to  managing the store operations, GA Europe  took full responsibility and accountability for:

  • Conducting ROT (retention of title) negotiations with suppliers.
  • Managing the approximately £30m cost base of the business including ransom creditors.
  • Buying in new stock for the business (£15m at retail price).
• Stores were traded initially whilst a buyer was sought for the business during which time a full stock liquidation programme was implemented along with an intensive marketing campaign.  With no buyer found, all stores were closed on a phased basis. The entire trading period totaled 7 weeks.

Outcome

• The trading outcome for the Administration exceeded expectations.
• Sales were 6% ahead of budget at £121.4m.
• Aggressive management of ROT led to a 15% improvement on budgeted costs.
• Store central and DC costs were 23% lower than budget, again due to aggressive cost management.