Sherwood to exit Birkin lace operation

Sherwood Group plc, UK, is at an advanced stage in discussions to exit its loss making Birkin lace operation and is selling its Texfin dyeing and finishing business.

Lace has long since ceased to be a core activity for Nottingham-based Sherwood. Between 1997 and 2001 it sold or closed its lace making businesses in France, Holland, Germany, the US and Mexico, and had been trying to find a buyer for Derbyshire-based Birkin International.

Having been unsuccessful in its search for an outright buyer, Sherwood now plans to close Birkin and is in talks to sell its machines and goodwill to a new company for £1.45M. The new company will be owned by a consortium of Noyon, the world’s leading lace company, certain members of the Birkin management team, a Far East-based company and Sherwood itself.

The new business will continue to make lace in the UK but at a much reduced capacity and with manufacturing partners in Europe and the Far East. A move to smaller premises is planned and surplus equipment will be sold to lace makers in the Far East.

Separately, the Texfin dyeing and finishing business is being sold for £450,000 to UK-based specialist fabric producer Nottingham Textile Group Ltd. Texfin will cease lace processing, its only significant apparel lace customer having been Birkin.

More than two-thirds of Birkin’s 209 employees, and over half of Texfin’s 63 employees will lose their jobs. Sherwood, says there will be temporary or long-term contracts in Sri Lanka and China for Birkin employees with appropriate skills who may wish to work there. Redundancy costs are expected to be around £1.5M.

Sherwood Group says that it will be close to a break-even position, before exceptional costs, in the six months to June 30, 2003. That compares with a pre-tax profit of £840,000 a year ago.

The decline in profitability was put down to increased losses at Birkin and TexFin as well as lower profits in the core garment business.