What are your thoughts on Patisserie Valerie?

Patisserie Valerie is breaking news as being one of the latest retail operators on the high street to have financial troubles. In this case, the financial troubles look to be emanating from a breakdown in management controls. There is reportedly a hole in the company finances of somewhere between £20-40 million and at present they do not know where that money has gone, although the finance director has apparently been suspended.

The situation came to light when HMRC issued a winding up petition against one of the main trading subsidiaries for unpaid taxes and when it was realised the business didn’t have the money to pay, the alarm bells started to ring. The main shareholder Luke Johnson has temporarily given the company a £10milion loan whilst more share capital can be raised from the shareholders. This emergency share capital raise is in the order of £20million.

The value of the business has crashed as a result of this situation from about £440m down to £160m. if the situation can be stabilised through the new share issue and the emergency loans then hopefully the business will be able to return to stronger profitability and growth.