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Oddbins looks to resurface after loss of 39 stores

Published:  11 March, 2011

Rival chains are running the rule over the Oddbins estate after the troubled company put 39 stores on the market and rumours continued to circulate about the remaining 89.

The most likely option is for the company to opt for a creditors voluntary arrangment.

WineShak said it was interested in taking some sites and Corks Out has not ruled itself out of a deal for some of the northern stores on Oddbins' hit list.

Restructuring experts were called in last week to help Oddbins find a way out of its financial predicament. The company's most recent accounts show a £4.6 million loss and industry insiders fear there may not be a way for the business to trade its way back into profitability in its current form.

Suppliers are unable to obtain credit insurance to supply Oddbins, and some have complained about late payments. Stock levels at many branches are said to be low.

If the chain opts for a CVA, suppliers have to agree to accept less than they are owed for an agreed timeframe. The alternative is creditors moving to wind up the company, a pre-pack administration or voluntary liquidation.

The chain, run by Simon Baile, son of former Oddbins boss Nick Baile, employs around 580 staff across its 128 stores.

A well-placed source told Harpers that Oddbins problems stemmed from difficulties in meeting payments to suppliers and to former owner Castel. He said: "It's a bit of a self-fulfilling prophecy right now - the announcement goes out about Spectrum, then about the store closures and every supplier gets on the phone."

Others said problems came from failing to manage the supply side of the business, adding that the chain should have negotiated deals with key suppliers over payments from the outset. An insider suggested the chain was still a "viable business" if properly managed, and if the number of sites could be whittled down to around 80. Another source said Oddbins still had "potential" given its good buyers and sites, if it gets the financing right.

Allan Cheesman, former Sainsbury's wine boss, said Oddbins problems had been "brewing for some time". "The complaints from unpaid suppliers, the issues about profitability, the cash flow problems... you go to stores and there's nothing much in them because a lot of people just withold supplies. It's an accident waiting to happen. The tragedy is we don't want it to because we want a strong specialist sector.

"I think the name Oddbins is still worth something. It's a great trading name with a great trading heritage. It's also got some very good locations."

BUYERS start lining up
As stores close, speculation mounts over which existing operators may buy sites. Wine Rack, initially thought to be the most likely buyer for the beleaguered chain, ruled itself out of the process. Chairman Laki Christoforou denied there was any truth in rumours that the 25-strong chain would buy some or all of the Oddbins stores.

But Robbie Saunders, associate director of the 16-outlet Hampshire-based Wine Shak told Harpers it was interested in buying two or three sites in the Home Counties. Wine Shak, set up at the end of 2009 after buying 14 stores out of the First Quench administration, said off-licence chains had to "offer something different from the supermarkets", as it does with its own vineyard.
Meanwhile north-west operator Corks Out, which runs five stores, has not ruled out a bid for stores in that area.


Mark Wilson, general manager of DeBortoli Wines UK, which supplies Oddbins with around 15 lines and 15,000 x 9 litre cases per annum, said he understood "people's caution and concern", but added that "some of these things snowball as people get cold feet".

"In terms of credit and supply issues it's important not to overcommit so that you are uncomfortable with the situation." He described the review as "very sensible", if "uncomfortable", adding that "if they can do this and make the business more efficient, it's in everyone's best interests".

Cave de Pyrene's sales and marketing director Doug Wregg said: "They are in limbo right now. If they can be transparent, and quickly, then it will be all the better for them and people who are dealing with them. The longer there is uncertainty and the rumours persist, the worse it will be. Once there is some certainty, you can at least deal with the issues."