More brands are selling stakes while the going looks good.
And while buyers include strategics and brand management firms eyeing expansion opportunities—such as Calida Group nabbing Cosabella, Delta Galil taking over Organic Basics and Authentic Brands making a play for Ted Baker—even venture capital is showing an appetite to wheel and deal.
Matalan Ltd.
Matalan founder John Hargreaves is looking for ways to keep control of the struggling fashion firm he founded in 1985. He’s considering injecting 25 million to 50 million pounds ($29.5 million to $58.9 million) into the business to avoid having to put the company up for sale.
According to an S&P Global Market Intelligence report from January, the fashion company said at the time that it would continue to “evaluate alternatives and market conditions” in the context of refinancing its debt. Hurting its bottom line has been added costs due to disruption in the U.K. logistics and labor markets. The company is believed to have secured debt totaling about 350 million pounds ($412.5 million) that is due in January, with another 130 million pounds ($153.2 million) due a year later. And compounding Matalan’s troubles is lack of lending capacity in the debt markets, a problem that surfaced after Russia’s invasion of Ukraine in February.
A spokeswoman for Matalan declined comment. Sky News first reported on Hargreaves’ proposal, and noted that some lenders are expected to push for a sale. There are reportedly two groups of bondholders, senior and junior, and each one is believed to be appointing its own financial advisor. The budget fashion and homewares retailer operates about 230 stores across the U.K.
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Next Plc
Next is said to have increased its investment in Reiss Ltd. to 51 percent, giving it majority control of the British fashion retailer.
Next acquired its initial 25 percent stake in Reiss in March 2021. That deal valued Next’s fashion rival at 200 million pounds ($277.6 million). Next acquired the shares from private equity firm Warburg Pincus, and included in its agreement was an option to acquire an additional 26 percent interest in Reiss. Warburg was the majority stakeholder in Reiss, while the founding Reiss family still retains a minority stake.
Following Next’s minority investment, Reiss continued to operate as a standalone business. Its digital business operates on Next’s Total Platform, which was also set to provide warehousing and distribution services for retail, wholesale and concession in February 2022.
Next is also in talks with troubled U.K. lifestyle group Joules to acquire a minority stake for 15 million pounds ($18.2 million). Like Next’s holding in Reiss, talks center on Joules using Next’s Total Platform services. Joules shareholders would still need to approve any deal reached.
Joules on Friday said that sales have tumbled in the five weeks since its last trading update. “The recent extremely warm and dry summer weather has adversely affected the full price sales of core categories such as outerwear, rainwear, knitwear and wellies and has compounded the ongoing subdued consumer demand due to the well-documented cost of living crisis,” Joules said.
The impact translates to an 8 percent year-over-year decline in retail sales for the 11 weeks of the current financial year to date, and retail margins have fallen by 6 percentage points year-over-year for the same period. Joules also said its expects a “significant loss in the first half,” although it is projecting an improved performance period in the second half. Joules said it was able to complete the documentation requirements with Barclays Bank that gives it an additional 5 million pounds ($6 million) in borrowing ability until November 2022 to support working capital requirements for the holidays.
Holzweiler
Norwegian fashion brand Holzweiler secured an investment stake from venture capital firm Sequoia Capital China earlier this month.
Founded by siblings Andreas and Susanne Holzweiler in 2012, CEO and chief commercial officer, respectively, the fashion brand is now majority owned by Sequoia.
One source said Sequoia’s investment will help the fashion brand expand operations in the U.K. and across China. Its first store in the U.K. is slated to open in London next year. It currently operates six stores in Norway, three in Oslo plus locations in Forebu, Bergen and Stavanger.
The brand, founded on its silk, lambswool and cashmere scarf collections, added ready-to-wear in 2014. The company said on its website that it’s “timeless pieces” draw inspiration from “art, architecture, nature and contemporary culture.”