Hunter’s fortunes mixed with retail empire cashing in on Office sale

Scottish tycoon Sir Tom Hunter has seen his retail empire weather the economic storm, but his property business has taken a hit as the market struggles to pull out of the downturn.

The retail business posted a strong financial performance, thanks in large part to the December sale of shoe chain Office, while property ran up a loss.

Accounts filed for West Coast Capital (WCC) Trading, which holds the Ayrshire entrepreneur’s interests in dozens of retail enterprises, show a pre-tax profit of £28.2 million after the group booked nearly £56m from the sale of its Office subsidiary.

This helped to offset £37.6m in write-offs against other investments, including a substantial reduction in the value of Hunter’s 27 per cent stake in Flying Brands.

Office accounted for a large proportion of the £212.2m in turnover generated by WCC Trading during the year to 31 January, down from £216.6m previously. The footwear chain was acquired by private equity house Silverfleet Capital in December in a deal reportedly worth £150m.

Since then, Hunter has also sold 80 per cent stakes in designer clothing chains USC and Cruise. Sports Direct paid £7m to acquire its controlling interest in July as part of founder Mike Ashley’s strategy to rid the sporting goods retailer of its discount image.

The result of these deals, a spokesman for West Coast said, will be a significant drop in turnover by WCC Trading in the current year. However, WCC Trading remains on the lookout for other niche retail businesses with potential for expansion.

Hunter, a vocal critic of the coalition government’s economic strategy, is said to be anticipating a tough Christmas trading period that could throw up buying opportunities early in the new year. “You don’t stimulate an economy by cutting investment and taxing people more – VAT being a prime example” said spokesman Ewan Hunter, who is unrelated to the entrepreneur. “Growth will come from market stimulation, not market debilitation.”

WCC Trading continues to hold 20 per cent of USC, but Hunter’s family personally owns the 20 per cent investment in Cruise, meaning it does not form any part of West Coast’s trading figures. Hunter rescued Cruise from administration just two weeks after the Office deal was announced, saving ten Cruise stores and about 300 jobs.

By contrast, Flying Brands has proven a more troublesome investment since WCC Trading paid £23.6m for its original 29.9 per cent stake in the Jersey mail order firm in 2006.

Poor trading has seen its share price halved in the past three months alone, despite completing a property deal in September to alleviate its debt burden.

Separate accounts for WCC Holdings – which manages Hunter’s 12 per cent stake in the House of Fraser department stores, plus a range of properties such as retail parks and shopping centres – show turnover of just £3.5m for the year to 30 March. This was down from £14.4m previously.

The crash in turnover combined with £528,000 in write-offs and £3.3m of losses on the sale of fixed assets to push WCC Holdings £13.9m into the red.

In the previous year, the property business had managed to rebound from the credit crunch with a profit of £6.3m.