Exclusive: Company pledges more shops and more jobs

YORKSHIRE discount grocer Fultons Foods is on course to reach 100 stores after the management bought out its private equity shareholder.

The deal, backed by Yorkshire Bank, sees managing director Kevin Gunter and finance director Karen Rees assume 100 per cent ownership of Frozen Value, which trades as Fultons Foods, after taking 3i’s minority stake.

Fultons, which was set up in the early 1960s, turns over around £55m and has stores stretching from Hull to Manchester and from Harrogate to Derbyshire.

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It has grown significantly since an earlier management buy-in, led by Mr Gunter and backed by 3i, in 1997.

The deal announced today means that Fultons will expand further as value retailers see increased demand from hard-pressed shoppers. It recently opened a larger shop in Rotherham, and Mr Gunter said the chain will open a larger shop in Barnsley within a fortnight as well as branches in Knaresborough and Ripon within four weeks, taking it to 95 stores and three market stalls.

Fultons plans to open at least eight shops a year net – taking into account larger stores in existing locations – for the foreseable future after agreeing funding from Yorkshire Bank, Mr Gunter added. It will add more stores in Yorkshire and plans to enter new geographical areas.

Mr Gunter said: “The funding is allowing us to secure an exit for 3i and will enable us to grow the business at a faster rate with a minimum of eight new stores and 60 jobs being created each year.”

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He told the Yorkshire Post that Fultons’ turnover had more than doubled since 1997, when it had 37 shops and six market stalls, and it expects to continue to win more customers.

“It is a tough market but we would expect that our type of business would continue to do well.”

The firm, which was grown from a market stall to a retail chain by Jack Fulton, has a core range of groceries with a broad frozen-food offering. Today, it has 850 staff and competes on the basis of selling “branded products at the lowest prices”.

In 2005, it invested in a new head office and warehouse facility close to the M1, near Barnsley.

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Mr Fulton no longer has a stake but Mr Gunter said they meet two or three times a year.

“It is a good relationship. He is a very nice grentleman. He is a Yorkshire man and he has built a Yorkshire business.”

Ms Rees, a former finance director at Rockware Glass, bought in to Fultons eight years ago.

Mr Gunter said: “In the last eight years, we have developed the business and worked well together. Both of us are looking forward to growing the business with the support of Yorkshire Bank.”

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The buy out of 3i, for an undisclosed sum, was led by Mike Selina, director with Yorkshire Bank Corporate & Structured Finance in Leeds, with associate Oliver Gaunt.

Mr Selina said: “Fulton Foods has a well defined and compelling retail proposition.

“It offers great value deals on branded groceries from convenient high street locations. It is well placed to help consumers manage their budgets, which are undoubtedly going to come under pressure with VAT and other tax rises and uncertainties over job prospects.

“Yorkshire Bank is backing an experienced management team, led by Kevin Gunter, who has a proven track record of success achieved by offering customers great value. The business is in good hands and well positioned for growth.”

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Yorkshire Bank Corporate & Structured Finance was advised by Kathryn Walter of Eversheds in Leeds.

The deal is the latest in a series of Yorkshire sales by 3i. Last year, the private equity house exited Pitman Training Group, one of the world’s oldest training companies and based in Wetherby, and wrote off its investment in Ultralase as the laser-eye specialist went through a restructuring deal.

Yesterday, 3i, which is based in London, declined to comment on the Fultons sale or to reveal how much of a stake it had held in the retailer.