Retail revival

Sterling agrees £10m bank facility for new stores

John Pattison, Sterling Furniture Group
John Pattison: challenging period

Sterling Furniture Group’s new chief executive has agreed a £10m banking facility to support several store openings and has refreshed the management team as he tackles a “material decline in profitability”.

The company has been hit by a failure to tackle its cost base during a period of high inflation and lower sales.

Turnover for the extended 18-month period to August last year came in at £83.7 million, against £55m for the 12-months to the end of February 2022. However, pre-tax profits for the same comparative periods plunged to just £43,870 from £4.15m.

A statement in the newly-published accounts acknowledges that “the material decline in profitability for the period is also reflective of the historic lack of action taken to address the cost base of the business given reduced sales revenues and inflationary cost pressures”.

Founded in late 1973 by George Knowles, the Tillicoultry-based firm last year appointed industry veteran John Pattison as CEO.

Mr Pattison, from Glasgow, has operated as a board director for more than 20 years, having latterly spent almost four years as commercial director at Sunderland-based sofa and furniture retailer ScS.

He launched ScS’s aspirational botanicals range, led the partnership with designer Laurence Llewelyn-Bowen and initiated its concept stores now being rolled out across the UK.

Since arriving at Sterling Furniture Group he has refreshed the management team and secured significant new funding in a new and extended arrangement with Royal Bank of Scotland, which is due to be formalised in the coming weeks.

Mr Pattison has mapped out plans for several new stores, starting with a 50,000 sq ft Sterling Home store at Hillington in Glasgow, for which heads of terms have been agreed. It is due to open by the end of the year.

He said: “It’s undoubtedly been a challenging period. We needed to take prompt and decisive action to set ourselves back on a sustainably profitable course, but I firmly believe that there are exciting times ahead for Sterling, all our colleagues and customers.

“To that point I really want to thank all the Sterling team for their incredible hard work, commitment and support in my first nine months, where we’ve made several significant changes across the Group.

“We’re powering ahead with the major rebrand to our Sterling Home marque and our leadership team has been reinforced by a number of significant senior hires that have already put the company in the best possible position as we build on the legacy created by George Knowles and embark on the next 50 years.”

He said the new £10m banking facility from Royal Bank of Scotland will consolidate Sterling’s existing term borrowings and provides expansionary funding, in the form of a revolving credit facility, to support the growth of the Sterling estate over the next five years.

“Through our refreshed leadership team, clear vision for growth, ‘right-sizing’ our cost base and our exciting new store plans – starting with Hillington in the coming months – we are looking forward to Sterling’s next 50 years with optimism and confidence,” he said.

Four new directors join Mr Knowles’ family members Euan and Murray Graham, who sit on the group and executive boards and George Smith Knowles, who sits on the group board.

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