An accounting scandal, a pandemic and an administration – Bensons for Beds boss Mark Jackson has had an eventful few years.
But it’s not causing him sleepless nights as the beds retailer’s recovery has been a dream so far as it has already returned to profit less than 18 months after it was rescued by Alteri.
However, one gets the impression that it is difficult to faze Jackson, who has had a rollercoaster ride since he joined Bensons’ former owner Steinhoff as chief financial officer in 2017.
“The company imploded six weeks after I started, and it almost immediately became about saving the business,” he says.
South African conglomerate Steinhoff was found to have a $7.4bn black hole in its accounts after it had overstated its profits over several years. When the scandal emerged, the value of the company plummeted and it rapidly approached the brink of collapse.
“Credit insurance was withdrawn, suppliers were wanting payment up front, and it became a very different game.”
Steinhoff was forced to sell off assets and restructure in a bid to cut debts and survive legal action, expected to be in the billions of dollars, from shareholders.
Jackson, who was promoted to chief executive of Steinhoff UK in February 2019, was then tasked with finding a new owner for the business.
“I became chief executive to manage the sale process,” he says.
Jackson recalls how he had to convince hedge funds that Bensons for Beds was a business that they could extract some value from.
He secured Bensons’ future when it was bought by private equity group Alteri Investors alongside Harveys in November 2019.
However, a pre-pack administration was undertaken in June last year and Alteri bought back Bensons but not Harveys.
A new lease of life
Jackson insists that Bensons was always a sustainable business.
“Bensons for Beds was a profitable business, while Harveys was a loss making business,” he says.
It’s latest financial update proves as much. Bensons returned to black in the five months to 30 September, 2021, when it delivered an operating profit of £1.6 million against sales of £101.9 million. This compares to an operating loss of £24.9 million for the 10 months to 30 April, 2021.
Alteri is investing to make sure Bensons remains a healthy business. The private equity firm has ploughed £25 million of investment into the business, which has been spent on a new ecommerce platform, product innovation, and store relocations and refurbishments.
“This is part of a three-year strategy to stabilise and grow Bensons for Beds as a standalone business,” says Jackson.
Part of this, includes the arduous job of having to relocate or partition Bensons for Beds stores that were shared with Harveys stores.
“Bensons for Beds shared 140 stores with Harveys. We had to relocate these or partition the back of the stores’ ground floors while keeping the front of house and mezzanine operational.”
“Part of the transformation is right sizing the portfolio, even where we want to be in a location, there’s no point in us having 18,000sq ft when we want six,” he says.
“Currently, we’ve got 180 stores that we want and we will transform some more, probably 10 or 15 per year.”
The retailer is also pushing ahead with store openings and relocations and plans to open 35 new shops this year.
Supply chain headaches
To make things more challenging for Jackson, he has undertaken this turnaround job in the middle of a global pandemic which continues to cause problems for the retailer, particularly when it comes to its supply chain.
In recent times, Omicron has hammered Bensons’ suppliers in the Far East, and in the UK and Europe, and made it difficult to receive product.
“Our head board manufacturer was at 60% capacity because of Covid,” Jackson explain. “The ports in China had to shut down. We had a fire outbreak at our factory in Malaysia just before Christmas, so there was a mad rush to get everything out of China before New Year.”
The pandemic has also changed how consumers have been shopping with the retailer.
“We’ve seen a massive increase in our online sales, particularly over the last three or four months,” he says. The retailer has posted “strong double digit” online sales growth compared to 2019.
“In that period, we’ve recruited both a head of digital, and a head of omnichannel, because it’s about getting the customer journey right across all of the channels. “We’ve recruited about 15 or 16 more people to put into that team.
Jackson believes that investing in tech is crucial but physical stores are just as important.
Jackson acknowledges that the beds sector is a very competitive market, with market leader Dreams firing on all cylinders, and a throng of new online upstarts such as Simba, Emma and Eve Sleep.
However, he believes stores are a vital part of the shopping experience for beds, with many shoppers wanted to experiencing the comfort first hand before buying, and by investing in omnichannel Bensons for Beds stands to prosper.
In fact, many of the online specialists have teamed up with stores-based retailers to have a physical presence where shoppers can try out their products. Eve is now sold in Next stores while Emma is stocked at Furniture Village.
“I don’t think all the focus should go into the tech basket,” he says. We’re always thinking about what does the customer want? How does the customer want to shop? Can technology make life easier for the customer”
Jackson believes that the company has many growth opportunities, both from the new stores it is opening and through digital and omnichannel.
With things looking rosier, there should be nothing keeping Jackson awake at night. However, he admits: “I’ve slept badly since my mid 20s.”
Maybe he needs to invest in a good bed.