Amazon in pole position to buy Booths in £150m sale

Amazon has been tipped as a likely buyer for northern grocer Booths amid reports of a £150m sell-off.

The Preston-based grocer has called in financial advisory group Rothschild to prepare a sale of its 28 branches for anything between £130m and £150m, according to this weekend’s Sunday Times.

The report suggested the northwest chain, dubbed the ‘Waitrose of the north’, could be set to end 170 years of family ownership.

And analysts have forecast Amazon, which began stocking Booths products on its online grocery site last month, could be a frontrunner.

Jonathan De Mello, retail consultant at Harper Dennis Hobbs, said any new buyer would need to be prepared to invest in the chain. Booths is understood to be pursuing an expansion out of its heartland territory of the north west despite racking up a £6.1m loss for the year to March 2016.

“The business needs investment to get to the next stage,” De Mello told The Grocer. “In terms of expansion, they see an opportunity in Yorkshire and the north east.”

Booths would enable Amazon to expand its bricks-and-mortar reach beyond its seven of Whole Foods Market stores in London, he added. “Amazon has Whole Foods in the south but Booths would give them coverage in the north,” he said. “Like Whole Foods, Booths has good-quality stuff and £130m would be nothing to Amazon.”

De Mello believed Waitrose, which used to have a joint buying agreement with Booths, would be the second most likely buyer. “It has that historical relationship. But £130m is still a lot more to them than it would be to Amazon.”

Shore Capital analyst Clive Black agreed Amazon could be the frontrunner in a sale that was likely to attract the attention of “all and sundry”.

“The logical acquirer of the ‘Waitrose of the north’, would be, well, Waitrose. However, we sense that John Lewis may be a little resource-constrained and so maybe the apparent lead player is not in pole position,” said Black.

“All of which leads us to ask whether or not, after the acquisition of Whole Foods Market, if Amazon UK may look at another high-end player, or indeed could something like Booths attract the eyesight of Trader Joe’s owners?”

Booths is due to announce its annual results for this year in the coming weeks, in which it is expected to still be reeling from a tough 2015-16.

For the year to March 2016, Booths posted a £6.1m loss and trading profits fell from £3.1m to £2.6m. Sales also fell 0.7% to £276.6m as the chain recovered from the impact of Storm Desmond, which shut its top-performing Keswick store for six months.

In May, 62-year-old chairman Edwin Booth took over the day-to-day running of the business following the surprise departure of CEO Chris Dee.

Booths has made gains in its online business, with its Christmas service helping to deliver a record-breaking £10m sales over the 2016 festive period, and it struck a deal with AmazonFresh last month. But it is understood that some of its new stores are struggling to pull in business.