Bonmarché U-turns and backs low-ball rescue bid from billionaire retailer Philip Day

BONMARCHE, the fashion chain best known for plus-size clothing, performed a spectacular U-turn today and accepted a £5.7 million takeover bid from the billionaire retailer Philip Day.

The Yorkshire-based retailer dismissed the 11.4p-a-share bid just weeks ago, saying it “materially undervalues Bonmarché and its future prospects”.

In an update today it admitted recent trading has been “poor” and gave a warning on profits due to “a significant degree of uncertainty”. Auditors may have to include a note in the accounts due next month about Bonmarche’s future as a going concern.

Bonmarché, which means “cheap” in French, saw shares tumble 27% to 11.35p, almost exactly in line with the offer. Day, 53, owns the Edinburgh Wollen Mill, which in turn owns Peacocks, Jaeger, Austin Reed and some other High Street stalwarts.

The offer for Bonmarché comes from his Dubai-based Spectre Holdings investment arm.

Bonmarché said: “Whilst the board’s view remains that the offer does not adequately reflect the potential longer-term value of the business, the increase in uncertainty that has developed reflecting the trading and financial position of the business during the first quarter of the financial year makes the certainty represented by the offer potentially more attractive in the short term.”

The company said cuts have lowered costs by £6 million a year and an overdraft facility of £5 million is in place, which means it has “adequate liquidity”. Bonmarché, led by chief executive Helen Connolly, partly blamed the weather for its woes. “In previous years, there would have been an expectation that at some stage during the selling season, better weather would generate a sales peak to offset the dip experienced during the first quarter but the current clothing market is not following the patterns of previous years”.

The company has 312 shops and 1900 full-time staff. Day has previously warned jobs will go if his bid succeeds. He already owns a 52.4% stake in the business, which made his takeover offer mandatory under City rules. Other shareholders — including Artemis with 12.5% and Cavendish with 10.8% — are expected to now accept Day’s bid.