Coffee chiefs brew up rescue

From The Sunday Times July 12, 2009

Matthew Goodman

BOSSES at the collapsed Coffee Republic are working on competing offers to buy the chain out of administration.

Steven Bartlett, who became a non-executive director last October after two years as chief executive, has teamed up with veteran retailer Milton Guffogg to assemble a bid ahead of tomorrow’s deadline for offers.

However, the consortium is likely to face competition from Peter Breach, executive chairman of Coffee Republic, who is thought to be working on a separate offer.

The administrator, KPMG, hopes a deal can be completed within the next few days. It expects to receive a number of bids after more than 120 parties expressed interest. Analysts said rival chains, including Costa and Caffè Nero, were likely to be interested in some outlets rather than the whole 184-strong estate. The portfolio largely comprises franchised shops, though there are some company-owned stores.

At a results statement last December, Breach said: “The company is likely to be operationally cashflow positive, and may indeed be earnings positive, by the end of the current financial year — I believe for the first time in [its] history.”

However, the group collapsed at the start of last week when several of its largest subsidiaries were placed into administration. On Friday, the parent company followed suit.

Guffogg, former chief executive of Celebrations Group, the card retailer, said that while the group had a strong brand, it needed a number of elements to turn it round, including “good management controls” and “strong leadership”.

Meanwhile, Sahar Hashemi, co-founder of Coffee Republic, said it was “a shock” to learn of its failure. She is not thought to be bidding.