Mountain Warehouse has expanded its store footprint with considerable pace over the past two financial years opening over 50 stores in that period. The company's 100th store opened earlier this year in Abergavenny and following recent new store openings in Cheltenham, Kendall and Cardiff, Mountain Warehouse now has 110 stores. This rapid growth, which has created in excess of 800 UK jobs, has allowed sales to soar by 50% to £47.5 million and profits after tax to increase by 100% to £3.7 million in the financial year to February 10, representing a fourfold increase in three years.

 

Mountain Warehouse has continued the fast pace of the last two years, by opening 18 new stores so far in 2010 and has plans for at least a further 18 over the second half of the year. Mountain Warehouse, with LDC's backing, aims to have in excess of 200 stores by 2014. So far in the five months of the current financial year to the end of July total sales have increased by 35%.

 

Mountain Warehouse came 23rd in this year's The Sunday Times Buyout Track 100 list of the UK's fastest growing private-equity backed companies and the company expects to maintain its rapid growth by reaching an annual turnover of over £100 million while doubling its workforce to around 1,500 people by 2014.

 

Mountain Warehouse's core philosophy is to provide fantastic value for money, great quality products, be family-focused and provide excellent customer service. Over 90% of customers rate the customer service as excellent or good. Whilst Mountain Warehouse's stores were initially in factory outlet centres, target locations have increasingly been tourist towns and historical city centres for example Ilkley in Yorkshire, Ely in Cambridgeshire, Truro in Cornwall and Ambleside in the Lake District. Five of Mountain Warehouse's stores used to be branches of Woolworths (Keswick, Buxton, Fort William, Kirwall in Orkney and Ilkley) with a sixth former Woolworths in Cirencester soon to open.

 

Mountain Warehouse, which already has one store in Vienna and three stores in Ireland, is also considering international expansion to take advantage of the economic recovery in other parts of Europe and North America.

 

This autumn a new higher-end clothing range, Mountainlife Extreme, will be launched to compete with premium outdoor labels like The North Face and Berghaus. At approximately twice the retail price of the mainline range, Mountainlife Extreme plans to use better-quality fabrics and have higher technical specifications while remaining very competitive on price.

 

Mountain Warehouse has been helped by the trend towards 'staycations' in the UK and the increasing popularity of music festivals - indeed the company's inexpensive tents and camping gear have proved to be ideal for revellers at events such as Glastonbury and the Isle of Wight.

 

KCAJ invested in Mountain Warehouse in July 2007 and this sale will return over three times its original investment. The proceeds will help to ensure a full return to the creditors who backed a voluntary restructuring of the Icelandic backed fund in February 2009.

 

This is LDC's ninth deal so far this year with close to £250 million of new capital committed. Retail is a key area of expertise within LDC, especially in their London office.

 

Carl Wormald, who led the investment for LDC, commented: "Mountain Warehouse has an excellent affordable proposition for the current economic climate. People are looking to buy quality outdoor clothes and products at value rather than premium prices. The company has a great management team led by Mark Neale and we're excited about working with Mark and his team to realise the enormous potential of the Mountain Warehouse proposition both in the UK and overseas."

 

Peter Brooks, London MD, LDC, commented: "Mountain Warehouse is another example of LDC's focus on the Retail and Consumer Brands. We're an active investor in this area having made investments in Modelzone, St Tropez and American Golf. It also illustrates our focus on backing strong management teams to roll out proven models to create scalable businesses."

 

Mark Neale, Founder, Mountain Warehouse, commented: "This is an excellent deal for Mountain Warehouse. It provides us with additional capital to help fund our store opening programme and our new higher-end clothing range. It also gives us access to LDC's extensive sector knowledge and experience. We very much look forward to working with them to fast track our expansion plans."

 

Rupinder Cheema, Investment Director, KCAJ, commented: "Mountain Warehouse has enjoyed tremendous growth since we invested in the business, driven by a winning retail formula and a great management team. It has been an excellent investment and this sale helps to secure the successful turnaround of KCAJ since it was restructured at the start of 2009. We wish Mark and LDC all the best with the business in the future."

 

NOTES TO EDITORS

 

Mark Neale

 

Mark Neale is a physics graduate from Oxford University. He subsequently worked for the strategy consultant Coba (now owned by PwC). He left the company at 26 to begin his entrepreneurial career and founded Mountain Warehouse with one store in Swindon in 1997.

 

Lloyds TSB Development Capital ('LDC') www.ldc.co.uk

 

LDC (Lloyds TSB Development Capital) is part of the Lloyds Banking Group and is authorised and regulated by the Financial Services Authority.

 

Since 1981 LDC has completed over 400 investments and has ongoing interests in over 60 businesses across the UK.

 

LDC back ambitious management teams from UK-based companies seeking between £2m and £100m of equity for management buy-outs, institutional buy-outs or development capital transactions.

 

LDC invests in a broad range of sectors and has particular experience in retail & consumer brands, financial services, healthcare, industrials, IT & software, leisure & media, , and support services.

 

LDC is the leading private equity company in the UK mid-market. Recent transactions include investments in 1st - The Exchange, Ansa / Independent Inspections, Cranswick Pet & Aquatics, Modelzone, Nuclear Engineering Services Limited, Quantum Specials, and Snell Limited. Recent exits include ATP, Card Factory and Telecom Service Centres.

 

LDC has 14 offices - Aberdeen, Amsterdam, Birmingham, Bristol, Edinburgh, Hong Kong, Leeds, Liverpool, London, Manchester, Newcastle, Nottingham, Reading and Southampton.

 

KCAJ

 

KCAJ is a retail sector focused private equity fund. It was established in 2005, with backing from Icelandic investors, and was managed by Arev. It invested in Mountain Warehouse in July 2007.

 

In February 2009 KCAJ went through a voluntary restructuring, following the economic crisis in late 2008. Since then it has focused on working with its existing portfolio of companies to maximise the value of its investments and has been managed by Investment Director, Rupinder Cheema.

 

The Mountain Warehouse sale secures the success of this restructuring and follows on from the disposal of KCAJ's investments in Aspinal of London and Unisport. KCAJ's remaining assets include Duchamp, the luxury menswear brand, and a minority stake in Jones Bootmaker, the footwear retailer.