Beales aims to go national after buying Westgate stores

beales, the regional department store chain, is to more than double in size in a transformational deal to snap up 19 outlets, including one in Skipton.

The Bournemouth-based group is buying the stores from mutual group Anglia Regional Co-operative Society as part of aims to become a national brand. It will leave ARCS with just four department stores as the co-operative looks to focus on food retailing, funerals and travel. The £7.5m deal will boost the Beales’ store portfolio from 13 to 32.

Around 830 staff employed in the stores, including some head office workers, will transfer to Beales. The ARCS stores currently trade as Westgate, apart from one in Abingdon, near Oxford.

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Tony Brown, Beales chief executive, said it was a “transformational deal for both businesses”. He said the thinking behind the deal was to “make two smaller businesses into one bigger business”.

He said the two companies share 180 suppliers and have complementary product groups. “There are benefits to be got by synergies,” he said.

Mr Brown will evaluate the stores over the next two years.

He plans to talk to landlords of the Skipton store about a new lease.

Beales, which operates largely in market towns across the UK, had planned to grow by one or two stores a year, but said the opportunity arose as ARCS wanted to refocus its business away from department stores.

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But the deal comes at a time of increasing concern over consumer spending conditions following a flurry of profit warnings from major high street players in recent days.

Mr Brown said he hoped the group’s positioning in local communities would help shield it from wider pressures on consumers.

“This is a plan for the long-term, so I’m not concerned about the current trading environment,” he said. “We are a market town operator, not in the big cities, and people will be shopping locally more than ever before, because of the price of petrol.”

He acknowledged that the current retail environment was “challenging”.

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Beales has not been immune so far to the tougher trading, with recent like-for-like sales down 4.7 per cent.

Losses at the £86m-turnover group have improved, narrowing by 32 per cent to £670,000 for the year to October 30, and Beales hopes the takeover will help return it to profitability within 18 months to two years.

The deal has been structured as a reverse takeover and ARCS is providing upfront financing, with terms that will see it receive the money back over the next few years. ARCS has also agreed to provide financial support for some stores to help Beales return them to profitability.

Beales aims to rebrand the stores over the next two years.