Dunelm in talks to rescue Goldman-backed WorldStores

One of Britain's most successful home furnishings retailers is in detailed talks this weekend to rescue a struggling online rival whose backers include the Wall‎ Street giant Goldman Sachs (NYSE: GS-PB - news) .

Sky News has learnt‎ that Dunelm Group (LSE: DNLM.L - news) , which is run by the former Apple (NasdaqGS: AAPL - news) and Dixons executive John Browett, is trying to wrap up a deal to buy WorldStores before the stock market opens on Monday.

It was unclear whether other rumoured bidders such as Edinburgh Woollen Mill have expressed a serious interest in buying WorldStores, or whether a deal would be concluded with Dunelm.

The online retailer, which owns the flash-sale brand Casafina, drafted in KPMG several weeks ago to oversee a quickfire hunt for new investors.

One source said that if a deal could not be struck over the weekend to secure WorldStores' future, it may not be able to continue trading without some other financial assistance.

A rescue by Dunelm would be expected to breathe new life into WorldStores.

Dunelm, which was established on a Leicester market stall in the late 1970s, has grown into one of the most formidable retailers in Britain, with the founding Adderley family remaining closely involved with the business.

The company trades from more than 150 stores across the UK, and now has a stock market value of £1.5bn, making the Adderleys' stake worth approximately £750m.

Goldman's merchant banking division led a £25m investment in WorldStores last year - a deal designed to pave the way for significant expansion, including a more efficient home delivery service.
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Despite growing sales, however, losses at the company are expected to rise from £9.6m in 2015 to £12.5m in this ‎financial year, before falling again to £6.4m next year.

WorldStores, which also owns the Kiddicare brand which used to be a subsidiary of the Wm Morrison supermarket chain, sells more than 500,000 products and claims to be the UK's biggest online retailer of home and garden products.

Based in Twickenham, it was set up by online marketing experts Joe Murray and Richard Tucker in 2008.

It has expressed grand ambitions to compete with offline furniture retailing giants like Ikea, and to replicate the growth of digital retailers such as AO.com and Ocado.

The size of Goldman's shareholding is undisclosed, but sources said the Wall Street bank had only a negligible interest in the business.

One of the executives who led Goldman's investment in WorldStores last year recently left the bank for a job at Warburg Pincus, the private equity firm,‎ although sources said his departure was unconnected to the deal.

In addition to Goldman, WorldStores' other blue-chip backers include Advent Ventures and Balderton Capital.

Dunelm and Goldman declined to comment on Saturday, while neither KPMG or WorldStores could be reached‎ for comment.