The London headquarters of the Lloyds Banking Group

The London headquarters of the Lloyds Banking Group

The investment arm of the part state-owned Lloyds Banking Group has snapped up a stake in budget outdoor retail chain Mountain Warehouse.

The deal, in which Lloyds Development Capital bought out the holding of Icelandic private-equity group KCAJ, will enable the retailer to continue its growth plans

Mountain Warehouse has opened more than 50 new stores in the last two financial years and now has 110 shops. The company said its rapid growth, which has created more than 800 UK jobs, has allowed its sales to rise 50 per cent to £47.5m and profits after tax to increase by 100 per cent to £3.7m.

The fast growing company has opened 18 new stores so far in 2010 and has plans for at least a further 18 over the second half of the year, with a target of more than 200 shops by 2014. So far in the five months of the current financial year to the end of July total sales have increased by 35 per cent.

It said it plans to launch a new ‘higher-end’ clothing range, Mountainlife Extreme, this autumn to compete with established brands such as The North Face and Berghaus. Costing about twice the retail price of its standard range, the company said Mountainlife Extreme plans to use better quality fabrics and have higher technical specifications while remaining competitive on price.

Mark Neale, the Oxford University physics graduate who founded Mountain Warehouse with one store in Swindon in 1997, said: “This is an excellent deal for Mountain Warehouse. It provides us with additional capital to help fund our store opening programme and our new higher-end clothing range. It also gives us access to LDC’s extensive sector knowledge and experience. We very much look forward to working with them to fast track our expansion plans.”

Carl Wormald of LDC added: “Mountain Warehouse has an excellent affordable proposition for the current economic climate. People are looking to buy quality outdoor clothes and products at value rather than premium prices. The company has a great management team led by Mark Neale and we’re excited about working with Mark and his team to realise the enormous potential of the Mountain Warehouse proposition both in the UK and overseas.”

The anglophile Icelandic founders of AREV and KCAJ named both companies after Coronation Street characters, their names backwards reading Jack and Vera, characters in the soap opera.

Following the deal, Lloyds Development Capital will have what is described as ‘a significant minority holding’ estimated at between 20 and 25 per cent, and will value Mountain Warehouse at more than £50m.

Taxpayers have a 43 per cent stake in LDC’s parent company Lloyds Banking Group following the Government bail-out of the bank in the midst of the 2008 financial crisis.