Johnson Service Group announced on 5 January that it has sold its retail drycleaning business to Timpson Group for £8.25million.
Johnson’s business, which includes Johnson Cleaners, Jeeves of Belgravia, and Jeeves International, made total revenue in the year to December 2015 of £46.2million. Profits in the same period were £2million.
Johnson will use the cash from the sale of the business to pay an additional £1.5m deficit contribution to its pension scheme, with the balance used to reduce net debt, it said.
Under the terms of the disposal agreement, in addition to the normal warranties and indemnities, there is a specific indemnity to cover the potential costs for closed stores for which the lease expired prior to 30 June 2016. As at 31 December 2016 the estimated provision for such stores within the drycleaning businesses, was £1.8 million.
In a statement, Johnson said that the board has been refocusing the group's activities over the last four years to concentrate on, and expand, the higher margin textile rental business. Over the same period, there was a significant reduction in the store portfolio of the retail drycleaning business, from some 500 stores down to 200 stores, to create a sustainable and profitable business.
The group believes there is further potential to expand textile rental organically and through acquisition, which will provide it with greater geographical reach and opportunities to consolidate service distribution.
“We continue to successfully implement our strategic growth plan, with the disposal of the drycleaning business enabling us to focus our efforts on the ongoing expansion of our textile rental activities,” said Chris Sander, CEO. “I would like to thank the whole of the drycleaning team, under the leadership of Paul Ogle, for the contribution they made to the group and wish them every success for the future.”
Timpson has 520 drycleaning stores and is now the UK’s biggest family-run drycleaner. It has 32 drycleaning production sites located around the UK, with 19 of these sites Timpson Super Hubs that act as satellite production centres.