Waitrose has pulled out of a potential deal to invest in Planet Organic.
The supermarket chain ended talks last week over an investment of millions of pounds in return for a sizeable stake in the rival grocer, according to a report by Sky News.
It follows intense media focus on the John Lewis Partnership, which owns Waitrose, as news emerged chairman Sharon White was exploring options to change the group’s mutual structure and sell a minority stake to outside investors.
The decision to abandon a potential deal with Planet Organic has left the smaller chain continuing to seek alternative funding avenues.
CEO George Dymond said the business was in advanced talks with ”several interested parties”.
“Planet Organic is continuing to perform well, with a strong sales performance across the business,” he added. “However, it has been a challenging environment in which to raise additional funds to support our growth plans.
“Advanced stage talks aimed at securing further investment are continuing with several interested parties. We are hopeful that we will find a way forward to assure the future of this much-loved brand.”
Waitrose declined to comment.
Planet engaged advisors at Interpath Advisory earlier this year to explore its options for fresh financing and potential buyers.
Dymond, who joined the business at the end of 2021, told The Grocer at the time that the supermarket needed £7m to help it open new stores and return to profitability.
Majority-owned by private equity house Inverleith since 2018, the business struggled during the pandemic as a lack of footfall in London, where most of its stores are located, hit sales and led to five permanent closures.
It has now booked losses in each of the past four financial years from 2018/19 to 2021/22, with more expected in the current fiscal period to the end of August.
City sources told The Grocer in Feburary that Waitrose was an obvious fit as a funding partner given the two businesses already worked together, with Planet products sold on Waitrose’s website and in its shops.
Amazon, which owns Whole Foods Market, was also touted as a potential buyer.
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, a change to the growth plan as Dymond scaled back ambitions to boost the estate to 50 stores meant the company had to pull the round before taking any money.
Planet is focusing on expanding its portfolio to 18 stores – from the current 14 – rather than the 50 previously targeted, Dymond told The Grocer in February.
He added that 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,” Dymond said.
“It is a much-loved London brand that deserves to be bigger.
“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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