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A Stockport based online retailer has completed a £3 million funding round to drive its future growth, with Arete and the TDC Impact Fund leading the investment.
Originally established as Fireplace Warehouse in 2005, founder Adam Leah built his business selling fireplaces and stoves via two websites, Direct Stoves and Direct Fireplaces. Together with business partner Ryan Hancock, the pair went on to acquire teak garden furniture business Cotswold Teak and specialist wicker basket business, Woven Hill. The latest £3 million investment will help bring the individual brands together to create Direct Home Stores, a new brand that is expected to generate £20 million sales within the next financial year.
The home improvement market in the UK has seen significant growth in the last few years, in part due to the increased time we now spend in our homes as a result of changes in behaviour, including flexible working, brought about by the pandemic. This change in consumer behaviour shows no sign of slowing down, with the market set to increase by a further five per cent in the short term.
Arete’s investment into the Stockport online retailer will allow the business to invest in its IT systems and expand sales channels with flagship stores in key locations around the UK. The deal will also help support senior hires to strengthen the firm’s leadership team; headcount at Direct Home Stores is expected to double in the next three years to support its ambitious growth plans.
Commenting on the deal with investors, Arete, founder Adam Leah, said:
“The team at Arete have a great understanding of the e-commerce market and can provide us with invaluable guidance as we approach this new phase of business. We believe we offer a distinct service unlike any other retailer in the UK, and, with help from Arete, we will be able to finetune this offering and extend our reach to a wider proportion of the UK home and lifestyle market. We are delighted to have the backing of Arete and TDC as M&A could form a significant part of our growth.”
Arete partner Ben Hatton, who will join the board, added:
“It’s a crucial time for the UK home heating market. Not only has there been an increase in consumers choosing to create focal points out of fireplaces in their homes, but in recent years we have also seen a resurgence of wood burning stoves and other alternative means of heating as energy prices have continued to spiral.”
“We have built a strong relationship with the team and have been extremely impressed by the ambition they have shown to work alongside Arete. The business is already very well established and is forecast to generate over £20 million turnover in the next financial year, so our goal now is to work with the group to develop its portfolio of brands and drive the business into its next stage of growth.”
The transaction was led by Simon Lord, Mike Bound with Ben Hatton, at Arete. Mike Murphy, Ben Correia de Sousa at Hill Dickinson acted as legal advisers to Arete. Victoria Daly, Mark Metcalf and India Kendrick led for TDC. David Crout at PMSI (commercial) and Phil Cox at Iafeya (technical) assisted on due diligence. Peter Hully at Claritas provided tax advice. Scott Sands, Terry Moore and Olivia Sturgess of Myersons Solicitors and David Middleton of Cole Associates advised the Vendors.