A clean break for ambitious bathroom retailer

Bathstore needed flexible banking arrangements to support its growth plans – Santander’s solutions saved the business money and set it on a steep growth curve

In Brief

  • Company turnover: £100 million
  • Sector: Retail
  • Bathstore is the UK’s largest specialist bathroom retailer with more than 170 stores across the country.
  • Bathstore needed a new bank – one that would tailor its financial facilities to the business’ growth requirements.
  • RD Martin Williams simplified complex banking arrangements and conducted a great deal of research to make sure the business was offered the most appropriate products.
  • Santander offered a package of solutions designed to save Bathstore money and increase banking facilities, to reflect the changing – and growing – nature of the business.
  • Facilities included a higher Bacs payroll limit, a bigger duty deferment bond on imports and a £30 million forex facility, as well as day-to-day banking and access to the Post Office network for cash drops.
  • The implementation team was able to transfer the company’s day-to-day banking facilities across all 170 stores without disruption to the business.
  • Bathstore has now increased its revenue forecast and is looking ahead to international expansion while consolidating its relationship with Santander. 

Founded in 1990, specialist bathroom retailer Bathstore has a network of 178 stores nationwide and with a turnover in excess of £100 million. Earlier this year, Chief Executive Gary Favell led a venture-backed management buy-out (MBO) with a view to realising substantial expansion plans for the business. 

A new way to bank

Before the MBO deal came to fruition, Gary and his management team needed to find alternative banking arrangements. As a large, national business with multiple sites across the UK, Bathstore needed a complicated set of financial solutions in order to operate at an optimum level. Its previous financial set-up had been inadequate and the team were looking for a bank that understood the business model and its specific financial requirements. 

Having considered a number of options, Bathstore chose to work with Santander. “We have strong financial backing so we weren’t on the lookout for a big loan deal,” says Gary. “But we needed a bank that could support our plans in every part of our business and that would be able to take us to the next stage of growth.”

Fine tuning the deal

Santander began talks with Bathstore to discuss the services it could provide – services that would fit its unique business model. There were many issues to consider, such as overseas product sourcing, and day-to-day cash handling provisions for every store. Relationship Director Martin Williams simplified complex banking arrangements and sought solutions that would improve current working practises and fuel growth. 

“They were looking for a fresh approach that could match their growth projections,” says Martin. “We quickly identified a number of areas in which their current facilities could be improved.”

Quick off the mark

Martin began by re-evaluating Bathstore’s foreign exchange and the bank created a new facility covering £30 million in transactions with currency risk fixed for 12 months, making budgeting much clearer and simpler. Santander also increased the company’s duty deferment bond from £500,000 to a more realistic £1.6 million, which reflected peak activity, rather than the far lower average figure that had previously been used.  

Another immediate advantage was giving Bathstore managers access to the Post Office network – the bank’s clearing agency – for paying in cash takings. Martin’s research showed that the majority of its stores are located within one mile of a Post Office (50% of those are within half a mile). Freeing up time taking payments to a bank branch was a simple solution that aided efficiency.  

Santander increased the business’ Bacs facility to ease pressure on its payroll. The previous Bacs threshold was set too low, meaning Bathstore was often charged an additional fee each time a payroll run was filed. This move alone has created an instant saving each month.

The extra mile

Uncovering the need for these improvements took plenty of due diligence and the Santander team worked thoroughly for many months, taking into consideration the needs of the business and keeping disruption to a minimum.

“They were very thorough, but we understood why they needed plenty of information and they made a huge effort to keep disruption to a minimum while we were focusing on the ownership transition and the future of the business,” says Gary.

The implementation team

It is no mean feat to create a system that accommodates more than 170 stores but the bank’s new implementation team streamlined the process and was able to transition the banking without disruption. “We created an implementation team in response to previous customer feedback, which helps to transition businesses from another bank to Santander. Its core role is to keep disruption to an absolute minimum so the business can continue to operate as normal,” says Martin.

“There were a couple of big challenges, including delivering all the necessary paying-in books, company cards and relevant literature to the store network. Another was synchronising the IT system, but again the implementation team was able to talk to Bathstore’s IT team and get the systems talking to each other.”

The deal concluded in mid-April this year with no major delays, despite Christmas and a change in FD for the business happening during the process. The important thing for Santander was to complete the switchover in a timeline that worked for Bathstore.

“It’s important to listen to the customer and not just replicate what they had before because, in our view, that wasn’t fit for purpose,” says Martin. “It was also important to demonstrate that we wanted the relationship and that we are here for the long-term. That was key to winning the deal.”

“We are impressed with how Santander operates and the solutions it has created for the business,” says Gary. “They treated us fairly and so far what they have done for us has been very impressive.”

Future solutions

With a revenue forecast of 5-10% growth per annum over the next four years, Bathstore’s switch to Santander has certainly achieved its aim of unlocking growth potential in the business. And with global expansion on the horizon, Bathstore can look forward to a very successful future, working with Santander to evolve and add to its banking arrangement as the business grows. 

“We’re in a strong position now and we know that if we need more help in the future, for international expansion for example, Santander will listen. The international reach of the bank is also becoming more attractive as we start to explore opportunities outside the UK. For me, they are the bank to be with.”


Download this client story as a PDF file (210KB)

Where Next?

Relationship Director Comments


They were looking for a fresh approach that could match their growth projections... We quickly identified a number of areas in which their current facilities could be improved.

Martin Williams