Workers told jobs are safe

Dec 14 2007 by Andrew Mernin, The Journal

BOSSES at The Original Factory Shop have reassured the firm’s 100-strong North-East workforce their jobs are safe after the company changed hands yesterday.

And the group, which underwent a £68.5m management buyout by Duke Street Capital from Barclays Private Capital, is in negotiations to open three new stores in the region which could create up to 75 new jobs.

The Burnley-based company currently has stores in Shildon, Crook and Stanley in County Durham and Ashington in Northumberland which each employ around 25 people.

The firm, which sells clothing, electrical goods, toiletries and homeware, has opened 12 new stores across the country this year and aims to open a further 15 to 20 in 2008.

A spokesperson for the company said it is currently in negotiations to open three new North-East stores while Duke Street Capital partner Tim Lebus said: “We are aggressively looking for new sites and they may be in the North-East.”

In 2004 Barclays Private Equity invested £18.42m in the company and has since grown its number of stores from 54 to 84.

Yesterday’s deal was facilitated by KPMG’s corporate finance practice in Newcastle. Rod Wilkinson, KPMG’s head of corporate finance in Yorkshire and the North-East, said: “Under the leadership of an astute management team in the North of England, this retailer is robust and thriving, insulated as it is from the high street competition.

“This sale makes the point that a solid business, prospering within its own niche in the market, can prove very attractive to investors even against the backdrop of recent market uncertainty.”

Despite being headquartered in Burnley, the Original Factory Shop has strong North-East connections.

In 2001 the firm was acquired by Anthony Solomon, the North-East entrepreneur behind Newcastle-based shoe retailer the Famous Brunswick Warehouse.

He sold the firm to Barclays Private Equity in 2004, however, former Brunswick director Colin Leggatt remains as the marketing director at the discount retailer.

Meanwhile, the chain’s chief executive is Newcastle-born George Foster who enjoyed a 21-year career at department store Fenwick.

The Original Factory Shop started life in 1969 selling over-makes and seconds manufactured for Marks & Spencer.