The 50-strong flooring chain, backed by Sir Richard Harpins Growth Partner, has appointed restructuring advisers, raising the prospect of store closures and redundancies as the cost of living crisis continues to weigh on consumer spending.
Flooring Superstore, which employs around 300 people at its headquarters in Bishop Auckland, County Durham, has called in Begbies Traynor and Santander’s restructuring department to weigh up its options. People familiar with the matter said both a corporate voluntary arrangement (CVA) and full administration were on the table, controversial routes that typically put pressure on landlords and suppliers while preserving the equity of incumbent owners and senior creditors.
The retailer was co-founded by Dan Foskett in 2012 and sells vinyl, laminate and wood flooring in addition to artificial turf through its branded showrooms and online channels. Growth Partner, the investment vehicle founded by Harpin, the entrepreneur behind home repair group HomeServe, backed the company with a £5m cash injection in 2020, allowing Foskett to crystallize part of his stake. He retains a 22 percent stake, while Growth Partner holds 25 percent. The rest is distributed among three individual investors.
Harpin, who published How to Make a Billion in Nine Steps last year, focuses on British and European retailers poised for big success. Its portfolio includes pizza oven specialist Gozney and bathroom retailer Easy Bathrooms. However, several Growth Partners-backed companies have collapsed in recent years, including Crafters’ Companion, co-founded by Dragons’ Den investor Sara Davies, and Yorkshire-based Keelham Farm Shop.
Flooring Superstore was a pandemic winner, benefiting from the wave of home improvement spending while consumers were confined to their homes. This tailwind suddenly reversed when lockdowns were eased, as the chain was forced to absorb rising energy and raw material costs and reduce the additional capacity it had built. The cost of living crisis has since driven up demand for expensive home renovations.
Connection Retail, the parent company which also owns Direct Wood Flooring, Grass Direct and Snug Carpets, reported sales of £49.3 million in the year to the end of July 2024, compared with £51.8 million a year earlier. Profit before tax still fluctuated from a loss of £3.3m to a profit of £619,000, while net debt stood at £3.5m at the end of the year.
Santander shored up the group’s balance sheet last June with a debenture, a secured loan agreement in which the lender acts as security trustee. Documents filed with Companies House show that Connection Retail has two outstanding claims as the company has pledged all of its property and business assets as security to both Growth Partner and the major bank.
The disclosed restructuring talks represent a notable turning point in the expansion plan that Foskett outlined just 12 months ago, when he told the Times he intended to expand the property to up to 150 stores, deepen the brand’s marketing reach and further expand its exclusive product range.
Growth Partner and Flooring Superstore had not responded to requests for comment at the time of publication. Santander and Begbies Traynor declined to comment.
