New home for Habitat as big cuts are planned

THE Habitat furniture chain is now owned by restructuring specialist Hilco after its Swedish owners agreed to inject £45m to rid itself of the business, according to reports.

THE Habitat furniture chain is now owned by restructuring specialist Hilco after its Swedish owners agreed to inject £45m to rid itself of the business, according to reports.

Although Hilco is not thought to be planning the closure of any Habitat shops, it could shed more than 50 head office jobs over the next year and tighten up its supply chain as part of a “savage” cost-cutting programme at the high street retailer.

It is understood Hilco believes the retailer does have a profitable future if it can achieve £20m of cost cuts and improve profit margins.

Habitat, which was founded by Sir Terence Conran in 1964, lost more than £13.4m in the year to March 30, 2008, the most recent results available.

It is thought the well-known high street brand has not made a profit since the end of the 2004/05 trading year and this had encouraged the sale by the Kamprad family, who are the heirs to the Ikea fortune.

The Kamprad family bought the furniture chain in 1992 for £78m, but increasing competition led to them putting it up for sale in October.

The Swedes are understood to have written off debts as part of the deal with Hilco and agreed to provide £45m of working capital, which will in part cover pension liabilities and make investments to kickstart a turnaround.

Hilco is believed to be planning to retain chief executive Mark Saunders, who was recruited from Levi Strauss in April.

The report said the new owner is expected to help Mr Saunders with his turnaround plan, which is aimed at restoring the firm to profitability in three years.

Mr Saunders believes his team can capitalise on the desire of recession weary Britons to spruce up their homes rather than selling them in the depressed market.

Mr Saunders is understood to believe many of Habitat’s problems are self-inflicted, with the retailer having suffered from poor customer service and over-pricing. Habitat operates 71 shops: 35 in the UK, 26 in France, five in Spain and five in Germany.

No one from Habitat or Hilco was available to comment.

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