Flooring retailer Tapi has struck a multimillion-dollar deal to save the Carpetright brand and a number of stores from administrators of its collapsed rival.
Tapi is to buy the Carpetright brand, intellectual property, 54 stores and two warehouses in a package management deal to be completed today and save more than 300 jobs.
The deal does not include Carpetright’s headquarters in Purfleet, Essex, or 200 other stores, resulting in around 1,000 job losses.
PriceWaterhouseCoopers has been looking for a buyer for Carpetright, which trades from 272 stores, after earlier this month it filed notice of intention to appoint a “big four” auditor as administrator.
Tapi is believed to be the only company to have made an offer that included saving both jobs and stores. Other options included the complete liquidation of the business.
Saving the entire business was “not viable” for Tapi because it had a large number of two establishments that would be subject to competition review. Much of the store’s assets were also unprofitable, with owner Carpetright financing these losses through additional debt.
Meditor, the owner of Carpetright, has ruled out trying to buy the business back or put any money in.
Jeevan Karir, chief executive of Tapi, said: “Our aim initially was to try to save all of Carpetright. However, when we delved into the details of the situation, we quickly realized that saving the entire business was not viable.
“The company has been financially unprofitable for many years and the owner has significant debts. We then turned to trying to salvage a number of deals, bearing in mind how any deal would be viewed by the competition authorities. So we reached 54 stores and two support warehouses.”
Tapi was co-founded in 2015 by ‘carpet king’ Lord Harris of Peckham, who also founded Carpetright. The name is derived from carpetFrench word for carpet.
The story of Tapi was one of rapid expansion. In 2016, the company operated carpets and flooring in only 15 stores. Today, that number is around 170. The largest shareholder and executive chairman of Tapi is William Barker.
Carpetright, still one of the UK’s largest flooring retailers, is struggling to keep up with Tapi’s competitive prices and range. Its business model has remained largely unchanged since its inception in the late 1980s and has struggled to keep up with the shift to online.
In April, it was also hit by a cyber attack that left it unable to trade from its stores for almost a week. Hackers attacked its headquarters with malware to gain unauthorized access.
Carpetright’s annual revenue fell to around £200m last year, compared with £372.6m in the 14 months to 1 January 2022 and £493.2m in 2020. The chain had more than £150m in 2020 . external debt and has lost more than £25 million in each of the past years.
Carpetright was founded in East London in 1988 by Harris, who stepped down as chairman in 2014. The company was delisted from the London Stock Exchange in 2019 when it was bought by Meditor, a British hedge fund headed by poker player Talal Shakerchi. which took over almost 30 per cent of its shares and more than £40m of its debts the year before.
Who is Lord Harris of Peckham?
The story of Lord Harris of Peckham is the epitome of “rags to riches” success (Isabella Fish writes).
Lord Harris (Phil Harris, as he was then) helped out at his father’s stall in Peckham market as a youngster, carrying rolled carpets to and from the stall.
His father’s early death cut short his education, leaving the then 15-year-old in sole charge of a market stall and two shops, one in Peckham and the other in Penge.
He had no intention of following his father into the carpet business. He wanted to be a professional footballer, but he had no other choice once his father died.
However, a great talent for mathematics and an entrepreneurial spirit meant that he was able to transform his father’s stall into the UK’s largest carpet and furniture chain, Harris Queensway.
Harris made his first fortune in the carpet business when he sold Harris Queensway in 1988 for £69 million.
He became known as one of the richest people in the country, a member of the House of Lords, a regular donor to the Conservative Party and a board member of Arsenal Football Club. He is also a keen philanthropist and has spent millions of pounds supporting his education projects in the UK, including the Harris Federations, which run around 50 primary and secondary schools across the UK.
After Harris Queensway was sold to become Lowndes Queensway in 1988, in a deal that valued the business at around £450m, Lord Harris could afford to put his feet up. Instead, he went and did it all over again, building another flooring business from scratch.
In 1989, he opened the first Carpetright branch in Canning Town, London. By 2007 it had become the UK’s largest flooring retailer with around 500 stores across the UK and was valued at around £800 million on the London Stock Exchange.
Harris stepped down as chairman of Carpetright in 2014 after 50 years in the business and sold all his shares. The business suffered a decline in sales and also endured a series of board changes. The decline in financial performance was largely due to the loss of the Carpetright business outside the UK, particularly in the Netherlands.
But Lord Harris was not finished with the carpets. As a family with decades of experience, he and his family created a new carpet and hardwood flooring brand called Tapi in 2015. His son Martin Harris resigned as CEO four years ago and no longer has any ties to the company. Lord Harris, now 81, is a member of Tapi’s board and leads the buying team. His grandson Charlie is involved in the business.
Now the “carpet king” is set to reunite with the carpet and hardwood flooring retailer he built from scratch some 40 years ago.
Tapi has bought the Carpetright brand and intellectual property in a deal that will also see Lord Harris regain ownership of Harris Carpets, his family’s first ever brand.
A close friend and colleague of Lord Harris said the carpet boss, who turns 82 next month, still works seven days a week between Tapi, the Harris Federation, Arsenal and the House of Lords.
“He has the best memory I’ve ever seen and is a detail-oriented retailer. He remembers every rug and price that went back years. He also remembers all of the store’s employees and spends much of his time helping with any problems that arise in their personal lives.”