The new management team brought in to turn round Patisserie Valerie has been placed on gardening leave just two weeks after agreeing to participate in the rescue of the company, two people with knowledge of the situation have said.
Chief executive Steve Francis, who was appointed in November last year by former executive chairman Luke Johnson, was told last week that his services were no longer required, the people said. Rhys Iley, the chief commercial officer who Mr Francis recruited from Starbucks to overhaul Patisserie Valerie’s retail offering, has also been ousted.
Causeway Capital, the Dublin-based private equity fund that backed the purchase of Patisserie Valerie from administrator KPMG, declined to comment. Mr Francis confirmed he was no longer working at the company but did not want to comment further.
On February 14, Causeway announced it had acquired 96 Patisserie Valerie stores plus the company’s head office and bakery in Birmingham from the administrators. The price was not disclosed, but it would likely have formed the majority of the £10m paid upfront for Patisserie Valerie and Philpotts, a smaller chain that was acquired separately by AF Blakemore.
“We are delighted to partner with the team and look forward to helping the business return to growth,” a statement said at the time.
Matt Scaife, the principal of Causeway, flew back from a holiday to dismiss Mr Francis barely a week later. Jose Peralta remains as director of food production and supply, although it is believed this is only on an interim basis. Mr Scaife declined to comment on the matter.
Mr Francis, Mr Iley and Mr Peralta had formed a plan to improve stores and the bakery operation, which would have needed fresh investment and additional working capital. They had also agreed to put their own money into the company in return for an equity stake.
This investment did not take place, with Causeway funding the entire purchase consideration, the people said. One person noted that the pedigree of Mr Iley especially, who was previously vice-president of European retail and operations at Starbucks, seemed out of line with the relatively small scale of Patisserie Valerie and speculated the executives may have been let go as a cost-saving measure.
Patisserie Valerie’s shares were delisted on February 25, having been suspended last October after the discovery of accounting irregularities. The Serious Fraud Office and the Financial Reporting Council are probing the conduct of the company, its former finance director, Chris Marsh, and its former auditor, Grant Thornton. At least one law firm is recruiting aggrieved private investors, whose shares are now worthless, with a view to mounting legal action against the company and its former executives.