Planet Organic has scaled back ambitious store expansion plans as it seeks fresh financing or a new owner.
CEO George Dymond told The Grocer the business is in “rude health”, but new funding is needed to open new stores and return to profitability.
The company is now focusing on boosting its estate to 18 stores rather than the 50 previously targeted, he added.
The specialist retailer hired consultancy Interpath Advisory to explore strategic growth options, Sky News reported this week.
The Grocer understands Interpath is running an accelerated sales process to find a new funding partner, with the possibility of a takeover also on the table.
City sources said “serious trade interest” in Planet Organic was expected, with Amazon, Waitrose and Next highlighted as potential interested parties.
“Planet would be a natural fit for Amazon with its ownership of Whole Foods,” one dealmaker said. “Waitrose also makes sense given the partnership already in place since last year, but it is unlikely the John Lewis Partnership can act quickly enough in a speedy process. And Next is a big buyer of businesses in the UK at the moment, so can’t be ruled out.”
Dymond, who took charge at the supermarket at the end of 2021, said the business was looking to raise £7m to get to 18 stores.
Planet, which was founded in 1995 and has been majority-owned by private equity house Inverleith since 2018, currently operates from 13 stores and is opening its 14th today (21 February) in Teddington.
“Rather than having an elongated fundraising campaign, which we spent a lot of time on last year, we are doing an accelerated version to make sure we get in front of interested parties, whether that is trade or any of the institutions, and doing it over a finite amount of time means I have more bandwidth to run the company,” Dymond added.
“We think 18 stores is sufficient to get the business to profitability and we are in a different paradigm then.”
Planet carried out a successful crowdfunding round on Seedrs at the end of last year, securing £7m in a campaign that valued the company at about £30m.
However, the company pulled the plug on the round before taking the money as the campaign centred around a growth plan of opening 50 stores, which has now been scaled back.
“As a result of a decision to adopt a different strategic approach to fundraising, Planet Organic decided not to continue with its primary round on the Seedrs platform,” a spokeswoman for the platform said.
“The campaign was cancelled before investor funds were released. We enjoyed working with Planet Organic and hope to partner with them in the future as and when raising from their community makes sense again.”
Planet has made losses for four financial years in a row from 2018/19 to 2021/22, with further losses expected in the current fiscal period ending in August.
It struggled throughout the pandemic as footfall in London, where almost all its stores are based, reduced, leading it to close five shops.
However, Dymond said the business was currently in “rude health”. “Sales are going in the right direction, with double-digit like-for-like growth, margins improving and costs coming down, but as a lossmaking, relatively small business we need the funding to get to scale.
“It is a much-loved London brand that deserves to be bigger,” he added. “The brand is bigger than the company already. It would be an absolute gem for someone to come and get involved with and is already doing pretty well in a very challenging economic climate.”
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