Management climbs Mountain in £85m buyout

THE management of Mountain Warehouse, led by founder Mark Neale, has taken full ownership of the business in an £85m deal, buying out private equity backer LDC.
Mountain WarehouseMountain Warehouse
Mountain Warehouse

Mr Neale, CEO of the outdoor clothing and equipment retailer, said the company is now looking to push ahead with a five-year plan to have 300 stores in Europe including countries such as Poland, Denmark and Germany.

Speaking to the Yorkshire Post, he said: “We think there is a passion for outdoor activities in those countries.”

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Mountain Warehouse currently has more than 160 stores in the UK, as well as six stores in Poland and one in Ireland.

Mountain Warehouse has about 20 shops across Yorkshire including in Skipton, York, Northallerton, Beverley, Ilkley, Harrogate, Richmond and Whitby. The Richmond and Whitby stores both opened this summer.

Mr Neale said: “We will at some point run out of growth in the UK.

“The shops that we have opened in Europe have been very successful so we think we have opportunities there really to carry on growing. I don’t think we could get to 300 stores just in the UK.”

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Mr Neale confirmed that LDC, which is part of Lloyds Banking Group, previously owned 22.5 per cent of Mountain Warehouse, with management owning the remainder. Management now owns all the shareholding of the firm. Mr Neale personally owns 85 per cent.

Speaking about the deal, Mr Neale said: “I don’t think it will make an enormous difference, apart from being able to focus more on the business for the long term, rather than focusing on the investors.

“I set the business up in the beginning... and have no plans to go anywhere so I think we are well set for the future now.”

The management team, led by Mr Neale, bought out LDC’s stake in the business with backing from Royal Bank of Scotland and asset management firm Alcentra.

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LDC acquired its minority shareholding in Mountain Warehouse in August 2010 as part of a £47m buyout.

Mountain Warehouse said it has “grown strongly “over the three years of LDC’s investment despite the challenging consumer environment, with turnover rising from £47.5m to £75.6m in the year ending February 2013.

The retailer has opened 60 stores and created over 500 jobs in the period.

Mr Neale said: “We have had fantastic support from LDC in helping us expand the business despite tough market conditions.

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“Having had four private equity investors over the last 16 years, we have now taken the opportunity to buy back full control and to push ahead with our exciting expansion plans. I am delighted that RBS and Alcentra are backing the team for this important next phase of growth.”

As well as his plans to expand the chain across Europe, Mr Neale said he also seeks to continue to grow its online business which is now shipping to more than 100 countries. The company was founded in 1997 by Mr Neale with its first store in Swindon.

It now targets market towns and locations popular with walkers and tourists. Several of its stores are in former Woolworths sites.

Mr Neale said: “Yorkshire is a really important part of the country for us.

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“We like it a lot and we do very well there. Customers seem to like us and we therefore like them.”

Bertie Aykroyd, investment director at LDC, said: “Mark and his team have delivered a strong performance in some of the most difficult conditions the retail sector has seen for many years.

“Thanks to a clear strategy, a highly capable team and a strong proposition, they’ve taken the business to the next level where it can now continue to grow and develop.”

Richard Yeoman, managing director of structured finance at RBS, said: “We initially met Mark and the team in 2009 and we were very happy to support the buyout in 2010.

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“We are delighted to be part of this new transaction and look forward to seeing this excellent British success story continue to develop”

Natalia Tsitoura, vice president at Alcentra, said: “Mountain Warehouse is a great business which has delivered great returns for a series of private equity investors.

“Mark was looking for a solution which helped him move away from private equity and we were happy to help provide this. We look forward to working with Mark and the team on this next part of their journey.”

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