Dragons’ Den star’s lingerie and stationery chains warn of doubts over finances

The former Dragons’ Den panellist Theo Paphitis says retailers are facing “one of the most complex balancing acts ever”, as two of his retail businesses face “material uncertainty” about remaining going concerns after being forced into the red by the Covid crisis.

His Ryman stationery chain is struggling to refinance a £10m government-backed loan, half of which is due to be repaid in March, after reporting a £2m pre-tax loss in the year. The loss narrowed from £13.2m a year earlier after sales increased almost 40% to £105.6m thanks to the easing of pandemic restrictions.

However, in accounts filed at Companies House this week, Ryman’s directors said there was “material uncertainty that may cast significant doubt of the company’s ability to continue as a going concern” if the company was not able to extend its banking facilities and sales growth or planned cost savings fell below expectations.

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Paphitis’s Boux Avenue lingerie retail chain also faces “material uncertainty” despite a 43% jump in sales to £67m, because it has net liabilities of £90m and made a £1.5m loss.

The former Dragon said Ryman had a 25-year relationship with NatWest, the bank behind its coronavirus business interruption Loan (CBIL), and he did not expect difficulties in extending the term and if necessary it could be repaid.

The entrepreneur said negotiations had largely been held up by a requirement for government approval to extend a CBIL.

Paphitis has promised to help support Ryman, into which he pumped about £8m during the pandemic, and Boux Avenue. “I am not concerned,” he said. “Either we will renew [the loan] or we will pay it back. I’m confident and happy to put my money where my mouth is.”

He said Ryman was taking longer to bounce back from the pandemic than his other retail businesses as many of its stores were in city centre locations that were suffering from the shift to working from home.

“It has still not returned to pre-pandemic levels of trade. Year to date, sales are up 16.5%, there is good growth coming through and that’s fantastic but you have got to understand where we have come from,” he said.

Sales at Robert Dyas rose by just over a third to £164m, helping the home and garden supplies retailer bounce back into the black with an £868,000 profit in the year to 26 March 2022 compared with a £2.1m loss a year before.

Despite the difficulties at Ryman and Boux Avenue, Paphitis said he was “still confident on physical retail” and plans to open at least another seven Robert Dyas stores including one this week.

The entrepreneur, who is thought to have been among the suitors for Paperchase after the stationery retailer fell into administration last month, continues to look for potential acquisitions, saying “all our businesses were bought in bad times”.

He said any acquisitions would have to fit with changing habits, adding that “shopping local has benefited” from the shift to working from home during the pandemic.

He said it was not “all doom and gloom” as rents and business rates had dropped, but this had not offset big cost increases on energy and labour, which would hit businesses particularly hard from April when government relief on electricity and gas bills is curbed and the legal minimum wage goes up.