* Next pays 33 mln pounds for initial holding
* Has option for further 26%
* Reiss will utilise Next's online infrastructure
(Adds detail)
By James Davey
LONDON, March 10 (Reuters) - British clothing retailer Next
has agreed to buy a 25% stake in upmarket smaller rival
Reiss and has an option to secure majority control, it said on
Wednesday.
The UK clothing sector has been hammered by COVID-19
lockdowns. With stores shuttered, retailers have had to rely on
their online channels.
Next has been a resilient performer during the pandemic
thanks to its huge online business and last year CEO Simon
Wolfson said the crisis would throw up acquisition
opportunities.
Last May, Next expanded its beauty business by taking on
five former Debenhams beauty departments, while in September it
established a joint venture with Lbrands to sell Victoria’s
Secret and Pink products. In January, Wolfson tried and failed
to buy the stricken Topshop brand which eventually went to ASOS
.
Next will pay 33 million pounds ($46 million) for the Reiss
stake and also make a debt investment of 10 million pounds,
financed from cash resources.
It has an option to acquire an additional 26% equity
interest at pre-agreed terms by July 2022.
Reiss is majority owned by U.S. private equity firm Warburg
Pincus, with the founding Reiss family retaining a minority
holding.
It's CEO is Christos Angelides who previously worked for
Next for 28 years.
Reiss operates in 14 countries from 79 stores, 104
concessions and via wholesale and franchises. It reported
turnover up 22% to 227.4 million pounds in the year to Feb. 1
2020.
Next said Reiss will retain its management autonomy and
creative independence.
The deal will see Reiss's online operations, both in the UK
and overseas, contracted to Next through Next's Total Platform
business.
Total Platform will also provide warehousing and
distribution services for Reiss's retail, franchise, wholesale
and concession businesses.
"We are excited to see what can be achieved through the
combination of Reiss's exceptional product, marketing and brand
building skills with Next's Total Platform infrastructure," said
Wolfson.
Shares in Next, up 41% over the last year, were down 0.4% at
1215 GMT.
($1 = 0.7200 pounds)
(Reporting by James Davey; Editing by Kate Holton and Emelia
Sithole-Matarise)
Next (NXT)
ASOS (ASC)
