In May 1989, Hamleys, probably the world’s most famous toyshop, was sold by its owners, Lowndes Queensway, to a management team supported by Cinven’s investors. The business had a number of competitive advantages that could be exploited and the management team believed this could be achieved in a relatively short space of time.
The strategy of exploiting its strong brand name, of reducing stocks and opening further outlets in key sites was not initially successful. However once the tourist trade in London recovered from the effects of the Gulf War and a new management team joined the business, a fresh round of funding was made available and the business quickly began to improve.
The company’s profit profile was transformed and by early 1994 flotation looked to be the best way for the business to raise further capital and continue on its path of further expansion. Hamleys was listed on the London Stock Exchange in May of that year, successfully completing a buyout which had had to operate in difficult market conditions.
Multiple returned on investment: 4.2x