Wed, 29 Mar 2023 | ADMINISTRATION
Clothing retailer Next has agreed to acquire the brand name, domain names and intellectual property of retailer Cath Kidston from administrators in a deal worth £8.5 million. The acquisition is the latest in a series of distressed takeovers of struggling retailers that Next has made in recent years.
The deal will see administrators from PwC trade down stock at Cath Kidston’s four remaining UK stores – in London, York, Ashford and Cheshire Oaks - before closing them permanently. The cathkidston.com domain will also be licensed back to administrators for a period of up to 12 weeks, as they seek to clear stock before the website is relaunched under Next’s ownership.
Since the COVID-19 pandemic Next has used distressed acquisitions to expand its brand portfolio, acquiring assets from struggling, well-known retailers and integrating them into its own offering. The firm utilises its strong high street and online presence and distribution network to tap into the value of these brands, while generally avoiding acquiring stock or extensive networks of physical stores.
In 2020, Next acquired the UK arm of US lingerie giant Victoria’s Secret after it fell into administration. The following year, it agreed a deal to operate the UK and Ireland business of US brand Gap. Last year, it acquired the brand, domain and intellectual property of collapsed furniture retailer Made.com for £3.4 million and also bought the majority of clothing retailer Joules’ assets out of administration for £34 million.
Founded in 1993, Cath Kidston is known for its homeware featuring distinctive floral prints. Prior to the COVID-19 pandemic, the business had a strong high street presence, but was already suffering from cashflow issues, reporting a £10.5 million EBITDA loss in the year to March 25 2018.
These issues were then compounded by COVID-19 and lockdown, leading to a pre-pack administration in which all of the firm’s 60 high street locations were closed, leaving its UK business trading online and through a handful of wholesale and franchise outlets.
The company was subsequently acquired by Hilco Capital – known for its investments in ailing retail brands including HMV and Homebase – in 2022. Last month, it was reported that Hilco Capital was seeking to sell the brand and it was then placed into administration again.
Following the sale to Next, joint administrator and PwC partner Zelf Hussain said: “Cath Kidston is a well-loved lifestyle brand founded in 1993 and I am pleased to say that it has been bought by Next who will make sure it continues to flower under their ownership.”
“The company has over recent years navigated through incredibly challenging market conditions including the pandemic restrictions, and most recently the decline in consumer spending driven by cost of living pressures and rising costs.”
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