TJ Hughes management buy-out to fuel expansion

The sale, backed by PPM Ventures, gives chief executive George Foster the financial clout to hit his target of more than 50 stores - compared with 37 now - within three years.

He said: ‘Under the ownership of JJB we consolidated and refurbished a lot of stores. We have not opened any this year, but we shall be embarking on expansion again.’

He aims to open two stores in 2004 and a further four to five stores the following year.

PPM Ventures director Gareth Whiley said the deal comprised approximately £20 million equity and £30 million debt. TJ Hughes’ two freehold properties will be remortgaged or sold and leased back to reduce debt, he added.

‘TJ Hughes has got a lot of roll-out potential. We hope to double our money in three to five years,’ he said.

Investec analyst Matthew McEachran believes TJ Hughes has a niche offer as a value department store chain, and said there is potential for expansion in the South. But he warned: ‘Growth is only good if you can maintain your share in your (existing) market.’

No management changes were revealed, but the retailer is seeking a chairman to replace JJB’s Dave Whelan. Andy Goody will remain finance director.

Last year, TJ Hughes generated sales of £208 million and profits of £6.4 million.