Denby Pottery Faces Administration Amidst Financial Strain
The historic British pottery company, Denby, is on the brink of entering administration, marking the second time in 15 years the brand has faced significant financial turmoil. Soaring energy costs, stemming from geopolitical instability in the Middle East, are cited as a key factor contributing to the decision. The Irish Independent first reported the news.
Hilco Capital Ownership and Past Restructuring
Denby is currently owned by Hilco Capital, a private equity firm co-founded by Paul McGowan. Hilco initially acquired Denby in 2010, rescuing the 200-year-aged brand when it was facing administration. Hilco Capital’s case study on Denby details their previous involvement, including a £30 million management buyout in February 2009. At that time, Denby was burdened with £72 million in debt and a significantly underfunded pension scheme.
Recent Financial Performance
Although Denby experienced operating profits of £295,000 in 2022 and £2.7 million in 2021, its financial performance deteriorated sharply in recent years. The company reported a £3 million operating loss in 2023 and a £4 million loss in 2024. Revenue also declined, falling from £52.1 million in 2023 to £45.4 million in 2024.
Impact of Energy Costs and Market Conditions
The pottery manufacturing process is energy-intensive, particularly due to the high temperatures required for firing. Denby used 35.8 million kWh of gas in 2024, compared to 38.7 million in 2023, but still represents a significantly higher usage than many other large businesses. The surge in gas prices following the crisis in the Middle East, particularly related to actions involving Iran, has significantly impacted Denby’s cost base. Directors noted that inflationary pressures and reduced consumer demand further compounded the financial challenges.
Hilco’s Previous Turnaround Efforts
Following the 2009 acquisition, Hilco Capital implemented several strategies to stabilize Denby, including renegotiating leases, expanding its outlet store portfolio (doubling it to 28 stores within 18 months), and acquiring other heritage pottery companies such as Burleigh, Poole Pottery, and Hartley Greens. They also launched new product lines, including cookware and cutlery, and established a partnership with Monsoon.
Current Situation and Administration Intent
The decision to pursue administration is intended as a means of saving the business and avoiding liquidation. The High Court in the UK has been informed of the intention to appoint administrators to Denby Holdings and related firms, including Denby Retail. Hilco Capital and Denby have been contacted for comment.
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