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Dreams sold to Sun European
Private equity firm Sun European Partners has acquired beds retailer Dreams in a pre-pack administration deal.
The company has bought 171 Dreams stores, its head office, two UK manufacturing facilities and supply chain network from the administrators Ernst & Young. The deal will safeguard over 1,600 jobs.
However, 93 stores not included in the sale will remain in administration, putting 400 jobs at risk. Administrators Ernst & Young confirmed that the remaining stores not included in the sale will remain open for business while they search for a buyer.
Administrator Alan Hudson said: "High street retailers have faced unprecedented conditions over recent years and the market for higher value discretionary purchases has been particularly tough.
"Dreams has suffered as a result of this depressed retail environment and while recent performance has improved, it has seen a decline in like for like sales as well as its operating margins being squeezed."
Jordan Wadsworth, vice president at Sun European, said: "Dreams is a well-recognised brand known for its wide product range of beds, headboards, mattresses and associated products. Despite operating with an over-expanded store base and significant debt in the precarious economic climate of recent years, the business remains the market leader and, with our support, is now well positioned to capitalise on future opportunities."
In a statement, Sun European added that all customer deposits and orders will be honoured following the sale.
Dreams was founded in 1987 by Mike Clare who sold the company to private equity firm Exponent in 2008 in a £200 million deal. It is thought that Clare was looking to win back the business by working with buyout firm Apollo Management but his efforts were unsuccessful.
Sun European Partners has significant retail portfolio which includes the sofa retailer ScS Upholstery, clothing retailer Jacques Vert Group, and the Bonmarché discount womenswear chain.
Founder and former chief executive of furniture retailer Dreams, Mike Clare, has expressed his disappointment and sadness at the news that the company is to cease trading.
Clare has been involved in marshalling a rescue plan for the retailer since autumn 2012, which would have seen its founder buying back the company. However, the repurchase of Dreams by Clare was unsuccessful.
Following the news Clare has announced that he is now developing a new bed retailing venture with the intention of it filling the vacuum the demise of Dreams will leave in the high street.
Commenting on the news Clare said: "I already have plans in an advanced stage to rescue as many of the stores in the Dreams portfolio, and with it as many of the jobs within the company's skilled workforce, as possible.
I already own the Dreams Head Office and will be announcing further plans in the next few days."