By Ian McConnell
Business Editor
SCOTTISH-based retailer guitarguitar, which employs 160 people and has a £45 million annual turnover, has unveiled a move into employee ownership as its founders look to the "next generation" to take forward the strongly growing business.
The in-store and online retailer said that the business restructure means that 60 per cent of all of its shares are now placed in an employee ownership trust, providing the 160-strong team with “the majority of the business and its profits”.
Now based at Linwood in Renfrewshire, guitarguitar has six stores and sells more than 50,000 guitars a year, from entry-level instruments to collector’s pieces from high-profile brands such as Fender, Gibson, Taylor and Martin.
The retailer, which started off in Edinburgh in 2004, said founders Kip McBay and Graham Bell had decided to make the switch to employee ownership to allow them to “plan for their respective exits from the company without threatening the legacy of the brand”.
The two founders each retain a 20% stake in the business.
A spokesman said there were “no firm plans at this time” when asked about whether this combined 40% of the business would go into employee ownership.
Mr Bell, who will remain as managing director for the foreseeable future, said: “Our team are over the moon to find out that they now own a share of this incredible business. guitarguitar’s success is a result of the commitment and hard work of our staff and we have now decided to take the next step and give them their own piece of the company.
“We’ve spent the last 20 years building a brand that we are wholeheartedly passionate about. We wanted to ensure the business means something to future owners when our time comes to take a step back.”
He added: “Not only did we want to reward staff for their efforts at the company but we also wanted to ensure our customers will always be front and centre. Every experience a customer has at guitarguitar will now be with someone who is invested in and committed to delivering outstanding service to musicians.”
Accounts for Guitar Guitar Limited show the company increased pre-tax profits to £3.098 million in the year to May 31, 2020, from £2.2m in the prior 12 months in spite of the temporary closure of stores amid the pandemic.
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Turnover rose to £35.5m in the year to May 2020, from £33.1m in the previous 12 months.
The directors say in their strategic report on these accounts: “This has been a very difficult and challenging time for the retail sector. Our retail stores were forced to temporarily close in March 2020 due to the Covid-19 pandemic. We are however pleased to note that the plans and actions that we have taken over the last few years allowed us to continue trading online which enabled us to grow our profits.”
The retailer has stores in Edinburgh, Glasgow, Birmingham, Epsom, Newcastle, and Camden in London.
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guitarguitar put its current annual turnover at £45m, indicating strong growth since the most recent set of accounts at Companies House.
Bobby Simpson, operations manager at guitarguitar, said: “This is a fantastic day for the team at guitarguitar. What a brilliant start to the year knowing that Kip and Graham have full confidence in every staff member to continue and develop the guitarguitar legacy.”
Mr Bell said: “The last 20 years have been an exciting ride for us all in guitarguitar. It’s time for Kip and I to let the next generation take the business into the future.”
Carole Leslie, of adviser Ownership Associates, said: “This is a great landmark for the musical instrument retail sector and Ownership Associates has enjoyed assisting such a prominent firm within the industry achieve its business goals.
“We’re seeing an abundance of interest in the business structure. When business owners like Kip and Graham are keen to outline their own exit strategy, employee ownership quickly offers itself as a clear option for providing a positive path for both owners and staff.”
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