L1 Retail

Holland & Barrett

L1 Retail made its first platform investment in Holland & Barrett, which provides attractive exposure to the growing health and wellness market

L1 Retail is seeking to deploy up to USD $3 bn of equity into attractive opportunities in retail.  This capital is flexible and can be invested in minority or control shareholdings.  L1 Retail’s investment team and Advisory Board leverage prior investment experience, industry expertise and an extensive global retail network to successfully implement this strategy.

Our investment team and the Advisory Board have guided many retail businesses to success through the years

Stephan DuCharmeL1 RETAIL MANAGING PARTNER

L1 Retail has a strong investment team, which is seeking investment opportunities and is supported by a world-class Advisory Board. We know the retail market well. We aim to add value through our deep sector and strategic expertise as well as our familiarity with data and financial markets.

L1 Retail Team

The L1 Retail investment team is led by Stephan DuCharme. Previously Stephan was the X5 CEO and oversaw a period of strong growth from 3,800 stores to over 12,000 stores today. During the year, the investment team has expanded and includes professionals with strong expertise in investment, finance and operations. L1 Retail continues to invest in building a world-class investment team with a long-term investment horizon.

L1 Retail has appointed an Advisory Board of internationally renowned retail leaders and specialists. They are deeply involved in supporting the investment team.

Karl-Heinz Holland served eight years as Chief Executive of Lidl Group, the pioneering German food retailer.

Clive Humby, one of the founders of dunnhumby (today part of Tesco), was pioneering the use of data in retail organisations long before the existence of ‘big data’.

John Walden has been at the forefront of multi-channel, consumer-driven retailing for more than 20 years. Most recently, as Chief Executive of Home Retail Group, John drove the digital transformation of Argos.

Each member of the Advisory Board brings complementary expertise from commercial and operations, data science and innovation through to digital and technology.

Investment criteria

L1 Retail has a longer-term investment horizon than many other financial investors, seeking to deploy capital into platforms that can be positioned for strong growth over 10 years and beyond. A key focus for any investment is to best position the business to react to and take advantage of sector disruption driven by technology and digital innovation.

The team play an active role in the companies in which it invests. L1 Retail works in close partnership with management teams at its portfolio companies and places a strong emphasis on recruiting, developing and retaining top-tier talent.

Acquisition of Holland & Barrett

On 26^th June 2017 L1 Retail announced that it had acquired Holland & Barrett from The Nature’s Bounty Co. and The Carlyle Group for £1.77 bn. Originally founded in 1870, Holland & Barrett has grown to be Europe’s largest health and wellness retail chain with strong brand loyalty and stores in more than 1,150 locations worldwide. As part of the transaction, Holland & Barrett successfully raised £825 m of senior debt financing, co-ordinated by Citi, HSBC, UBS, Societe Generale and Barclays, with the equity funding provided by LetterOne.

Holland & Barrett is a clear market leader in the UK health and wellness retail market, with attractive growth positions in other European and international markets, and growing online presence, with a leading customer loyalty programme and 10 million active cardholders. We believe that the company is well positioned to be a growth platform, capable of meeting the health and wellness needs of its customers and benefiting from structural growth resulting from increased awareness and desire for healthy living. Holland & Barrett has achieved 35 consecutive quarters of like for like revenue growth driven by strong execution, product innovation and a growing digital presence.

Working with the management team at Holland & Barrett, L1 Retail is developing a long-term vision and growth ambition for the company, which will be driven by digital transformation of all aspects of the business, leveraging data to better understand and meet its customers’ needs, defining the technology capabilities required, and shaping the leadership and culture to drive focus on achieving long-term success in a changing retail environment. To achieve this, Holland & Barrett will accelerate its investment in recruiting and developing top-tier talent in all areas of the business.

The consumer landscape has changed

L1 Retail believes that data is the new oil. This vast, untapped reservoir represents limitless potential value. Yet, in its crude state it poses real challenges for business.

The emergence of social media has meant that nowadays everyone leaves a trace – a trace that has become the lifeblood of business. Customer control of the content generated and consumed on digital channels is constantly increasing, so understanding their behaviour is essential.

The social media trail can be read to discover passions, media consumed, influencers, and brands engaged with by consumers. Until cultural understanding of customer motivations and aspirations is reached, a brand cannot make itself relevant. Gain this understanding, and you can see your brand through the eyes of your customers.

There is more to understanding your customers than an in-depth knowledge of their past behaviours. But this is what most customer insight teams will do: they are glorified management information teams, manipulating historic data to determine some proxy personalisation.

Without storytelling, data offers just a rear-view mirror. Next-generation customer insight will bring personality to big data; it will go beyond backward-looking internal customer information, using social and market data simultaneously to identify communities based on shared passions, interests and behaviour. This precise segmentation will be invaluable in developing a customer engagement strategy; it will inform board-level decisions and impact the customer experience.