Johnson to axe 100 drycleaning shops in turnaround plan

JOHNSON Service Group is to close 100 poorly-performing drycleaning shops in a major overhaul which it says will cost it nearly £24m.

The Cheshire company said the restructuring followed a strategic review of its 460 shop drycleaning business, which has been the worst performing of its three divisions – the others are textile rental and facilities management.

While the review concluded that Johnson has a “viable, profitable and resilient core drycleaning business” it needs to be smaller, and to save costs, should be combined with the textile rentals division in a single textile division.

As a result of the proposals the Preston Brook-based company said it would incur £23.9m in restructuring costs as an exceptional item in the second half of this financial year.

The shop earmarked for closure experienced an estimated like-for-like sales decline of 2.7% in the first half (4.3% decline in the full year 2011) whereas the continuing shops were marginally positive (0.3% up) in the full year 2011.

Executive chairman John Talbot, said: “The restructuring is supported by strong trading and cash generation from the textile rental and facilities management businesses and we believe that the measures we have taken will refocus the group into a more streamlined and profitable business. 

“We have confidence that our continuing drycleaning estate will not only be able to withstand the current retail environment but make a telling contribution to the group’s future performance. 

“Textile rental and facilities management continue to perform well and, following the integration of the two recent acquisitions, we are very optimistic about the future profitability of the group.”

Overall, Johnson said trading results for the six months to the end of June 
are expected to be in line with management expectations, with the textile rentals business performing strongly and facilities management delivering an “encouraging” performance.

In the drycleaning division like-for-like sales are down 0.5% in the first half of year.

The group said Paul Ogle, who has been leading the drycleaning business as managing director, would be standing down as a main board director, but remaining in the enlarged textile division