Five months into its strategic review of Jawoll, B&M has decided to sell the German arm of its business, according to Retail Gazette.
The £11m deal
B&M has sold its 80% shareholding in Jawoll to a consortium led by AC Curtis GmbH for €12.5m (£11m). Another part of the consortium is an existing shareholder in the value retail business.
€2.5m of the transaction is payable on completion, which is expected to occur within the next 28 days. The further €10m will be payable on December 31st 2020 on the condition that the business is still trading.
The buying consortium have also agreed to repay Jawoll's bank debt.
Challenge clearing poor-selling stock
Jawoll currently trades from 89 stores in the North-West of Germany. It reported loses for the financial year to March 31st 2019, of £15.4m.
B&M purchased Jawoll in 2014. At the time it had 50 stores and was one of Germany's leading variety discounters. B&M expanded the estate but struggled to make the business profitable due to poor-selling legacy ranges. This hindered progress with the need to mark down stock. B&M had been working towards accelerating the rate of products sourced through the B&M supply chain and adapt the range to be closer to that of the UK.
Despite this, Jawoll was placed under strategic review in November 2019 after continued disappointing performance. The variety discount channel is very competitive with retailers such as Tedi rapidly expanding. After first opening in 2004 Tedi has opened over 100 stores a year, expanding to close to 2,000 stores in Germany.
French business continues to perform well
B&M has been pleased with the performance of its French business, Babou. The introduction of the new product ranges directly sourced from B&M have been successful and all inherited stock is expected to be cleared by the end of 2020, leaving only products that were sourced using B&M's supply chain. This has changed the mix of sales, with clothing and footwear now accounting for 25%, compared to its previous 40%. Food and FMCG is now approximately 10% of sales, with this expected to increase in the future.
For subscribers wanting to learn more about the French business, read our Babou store visit report.
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