Hobbycraft To Sew Up Sale After Profit Boost

The owner of one of Britain's biggest arts and crafts retailers is to explore a sale of the business after booming demand for its products triggered a surge in profits.

Sky News has learnt that Bridgepoint, which took control of Hobbycraft in 2010, has opened talks with investment bankers about raising growth capital to help fund the company's further expansion.

A deal could include selling a minority stake in Hobbycraft, although the length of Bridgepoint's ownership suggests that an outright disposal could take place as soon as the next 12 months.

The chain, which trades from 83 stores across the UK and works with celebrities including Kirstie Allsopp, has benefited from growing interest in arts and crafts stimulated by television programmes such as The British Sewing Bee,

Last month, it announced that sales in the ending 21 February grew by 7.6% to £151.8m, with pre-tax profits up by nearly 63% to £10.9m.

Bridgepoint paid more than £100m to buy Hobbycraft in 2010, and installed Archie Norman, the former ITV (LSE: ITV.L - news) chairman and one-time Conservative MP, as its chairman.

Mr Norman has helped to steer the business through a three-year transformation programme, with the chain's management said to have aspirations to open dozens more stores across the country.

That ambition would appear to be justified by the fact that the £3bn crafts market in Britain is estimated to be growing at an annual rate of about 4.5%, bucking the trend of many other parts of the UK high street.

A growing demand for personalised products and effective use of social media platforms such as Instagram and Pinterest are among the factors cited by Hobbycraft as reasons for its rapid growth.

It also has an online club with nearly 2m members, and has launched an initiative enabling customers to share their creations.

Potential bidders for Hobbycraft are likely to include a long list of private equity firms, while Halfords was among the parties which tabled offers during the 2010 auction of the company.

Catriona Marshall, Hobbycraft's chief executive, said in June: "Three years of business transformation and investment in infrastructure are paying off.

"Strong growth was driven by our newly-created distribution centre and supply chain initiatives, together with an expanding store network and established online trading platform."

Hobbycraft's price tag was unclear on Friday, although it is likely to be well in excess of the figure paid by Bridgepoint for the company six years ago.

Bridgepoint declined to comment on its plans for the business (Other OTC: UBGXF - news) .