UK high street retailer - business restructuring impact on brand value
PwC's client, a well-known high-street retailer with branches throughout the UK, a flagship store in London and an internationally known brand name, had experienced poor trading over a number of years. The retailer approached PwC to help it consider the strategic options available for the group. The company was looking to extract the maximum value from its brand name and reputation while minimising the losses currently being incurred by the UK operations and associated cash outflows.Using extensive industry experience and skills in valuing retail operations, the PwC team highlighted the value available in the retail operations as a whole, and in the flagship London store as a stand-alone entity. The PwC team considered the possible value available from franchising and/or licensing the brand name and offered a robust analysis of the value impact of three different exit scenarios. This provided management with a recommended option that would maximise brand value whilst minimising cash outflows.
The retailer acted on the advice and closed loss making stores, scaled back operations in other locations while retaining the flagship London operation. The company moved ahead with plans to franchise out the strong brand name to realise some real value. PwC's advice enabled the client to confidently take the critical decisions needed to extract value from the distressed business position and maximise shareholder value when it found itself in a difficult and time critical situation.
