In fact, it was 12 months ago, when the hullabaloo over private equity was at its peak, that the biggest buy-out funds were given a roasting in parliament over their lack of transparency.
Among those facing the MPs was KKR partner Dominic Murphy, who along with Stefano Pessina had just sealed a deal to buy Alliance Boots. Despite their promises that this would be a more open, more responsible type of deal than we’d seen before, many expected that the largest deal of its type that Europe had ever would turn out to be the ultimate private equity job.
In some respects, that’s how it’s turned out. The company has achieved£68 million of cost savings, helping profits soar more than 20 per cent. Now it is turning its attention to suppliers, accusing them of having enjoyed a cosy relationship with Boots for far too long.
However, this week’s impressive full-year results, presented with an unprecedented level of detail for a private equity-owned company, show that Pessina and KKR have been true to their word. Job cuts have been insignificant and heavy investment is going into updating stores that had been showing their age. No whopping dividends are being taken out and the company is still focused on being a leader in areas such as CSR, which is often forgotten about when private equity takes charge.
More tests lie ahead, but, in the nine months that they have been custodians of one of the high street’s most cherished brands, Pessina and KKR have gone a long way towards proving it is in safe hands.
A false dawn
May’s BRC sales figures were inevitably going to be better than April’s, as the long-overdue improvement in the weather coincided with softer figures from last year.
Don’t be fooled, though. This week’s warning from Tesco about the slowdown in its non-food growth was a much truer barometer of consumer sentiment. And, with fuel and food prices bound to rise further, it is only going to get worse.
Read Tim’s The Retail Week column today at retail-week.com
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