The Works braces for boardroom battle as activist investor pushes for more control
Discount retailer The Works has been engulfed in a boardroom drama as a notorious activist investor pushes to install a retired private equity partner as a director.
The retailer, which sells toys and arts and crafts, warned on Thursday that the attempted coup could “create unnecessary distraction [and] risk derailing” the board’s growth strategy.
Kelso, a London-listed activist investor, told The Works to appoint Graeme Coulthard, a retired private equity specialist, as a director at its annual general meeting, set to take place early next month.
The discount retailer said it pleaded with Kelso to withdraw its request, only for the activist investor to say that it “remained intent on proceeding”.
The Works said it told Kelso that this move would “not be in the best interests of the company or its stakeholders and would be more likely to undermine, rather than enhance, long-term value creation,” but failed to talk the activist investor down.
The proposal to install Coulthard on the board will now be put before shareholders. The Works has urged its investors to slap down this power play.
Coulthard’s appointment would “create an imbalance in governance and potentially result in particular shareholder interests being prioritised over those of the broader shareholder base, with a consequent risk of value destruction,” the retailer said.
Board hopeful ‘lacks expertise’
The Works took aim at the prospective director’s supposed lack of expertise, telling investors he “has limited experience as a director of a listed company and no executive experience in multi-site value retail operations”.
Coulthard, who owns eight per cent of The Works, served as a partner at London-based private equity firm Charterhouse for 19 years, before his retirement in 2017.
The retired businessman served on the board of Card Factory for nearly a year, before losing his seat in February 2015 when Charterhouse sold its stake in the retailer.
“While Mr Coulthard has a background in accountancy, the board already has significant expertise in this area and notes that his experience is primarily as a private equity investor rather than as an operator of businesses,” The Works said.
The retailer also claimed that Coulthard has not completed the due diligence checks that would qualify him to become a director of an AIM-listed firm.
The Work’s shares fell by more than four per cent, to 89p, after the group published its broadside against the activist investor.
Kelso: The Works is ‘undervalued’
Kelso has a history of pushing for control of The Works. In 2024, the retailer’s share price jumped after the activist investor picked up two board seats.
In February this year, the retailer’s share price spiked after Kelso upped its stake in the firm, which it dubbed “one of the most undervalued companies on the UK stock market”.
The Works has been attempting to overturn its reputation as a “pile ‘em high, sell ‘em cheap” discounter, by leaning into “screen-free” entertainment for children in an appeal to British parents.
Last month, The Works chief executive Gavin Peck told CityAM that these efforts have taken a boost from Labour’s crackdown on children’s usage of social media.
“Anything that the government brings in heightens that awareness as well, and we certainly hear and see more people talking about that,” he said.
The retailer posted 3.3 per cent sales growth and £260m in revenue in the year to May, pushing adjusted profit up 44 per cent to £7.2m.