Oddbins’ parent company lost £10m and its AWSR prior to going into administration
The parent company of UK wine retailer Oddbins lost £10 million and was stripped off its alcohol wholesale registration licence (AWSR) six months before the retail business was placed in administration, db can reveal.
Walsall-based European Food Broker Ltd (EFBL) lost over £10 million in the 18 months to 31 June 2018 – an increase of 2000% on the 12 months to January 2017- on turnover of £53.76 million, according to accounts filed at Companies House this week. The losses were recorded less than six months before the company’s decision to put its retail business, EFB Retail Ltd – which comprised Oddbins (Whittalls Wine Merchants 1 and Wine Merchants 2) and sister company Wine Cellars Trading Limited (WCTL) – into administration in January 2019.
The business also had its AWSR license revoked by HMRC in May 2018, the documents confirmed, which barred it from operating as a wholesaler from July 2018. This slashed its revenue stream and prompted the directors to close depots and reduce the headcount by 50% to cut the payroll by 68%, it said.
“The fairly large one-off costs associated with the restructuring of the business have increased the losses of the company during the period,” the strategic report stated.
As previously reported by db, in February 2018, HRMC revoked the the parent company’s excise approvals, following an appeal at the First Tier tax courts, which prevented it from operating its bonded warehouse and forcing it to pay duty on all its stock. This meant it could no longer buy in bulk to secure competitive pricing from suppliers, and putting a severe strain on cashflow.
Buy-back of the company
The statement, which was signed on 8 August 2019, also said the business was in “advanced talks” with the administrator and brand owner to acquire a portfolio of profitable retail outlets.
“Were this discussion to lead to an acquisition then the directors believe the structural changes already made would mean the company would be on an even keel to deliver sales and profit growth going forward,” it said.
However it said it would hold off major investments until the full impact of Brexit was ‘quantifiable and understood”.
In June, db reported that nearly half (45%) of the retail stores owned by European Food Brokers Retail Ltd were unprofitable and had been shut by the administrators, substantially higher than had been originally thought with two thirds CHECK of the closed stores coming under the Wine Cellars Trading Limited (WCTL) banner, and under a third (13) of Oddbins stores.
According to administration proposal documents filed at Companies House in April, 58 stores remained trading, but further store closures during the potential sale process were not ruled out.
In June, reports surfaced that the UK wine merchant may be rescued from administration by its former owners four months after being placed in administration, although European Food Brokers did not responding to db’s requests for comment.
For our analysis of the potential sale and buy-back of Oddbins originally published in June, please see here.