Next boosts stake in Reiss Group to 72% with £128m deal
- Upon the deal’s completion, Next will have increased its stake in Reiss to 72%
- Reiss was founded in 1971 as a men’s tailoring store in London’s Bishopsgate
- In the last financial year, Reiss aw sales jump by over a quarter to £324.6m
Fashion retailer Next has joined forces with the Reiss family to acquire a significant stake in the Reiss Group.
The two parties have agreed to spend £128million purchasing a 34 per cent stake in the luxury clothing chain – whose fans include the Duchess of Cambridge – from American private equity giant Warburg Pincus.
Upon the deal’s completion, Next will have increased its stake in Reiss Group from 51 per cent to 72 per cent, while the Reiss family will possess a 22 per cent stake and the remainder held by the Reiss management.
Acquisition: Fashion retailer Next and the Reiss family have agreed to buy a 34 per cent stake in the Reiss Group from American private equity giant Warburg Pincus
Founded in 1971 as a men’s tailoring store in London’s Bishopsgate district, Reiss’s products are now sold in 266 outlets across 18 countries.
In the last financial year, the brand saw sales jump by over a quarter to £324.6million and pre-tax profits climb by more than half to £51.6million.
Sky News reported in June that Next was in talks with Warburg Pincus to auction the business in a potential £500million deal.
However, some suggested that the FTSE 100 retailer was using the process to determine a market price and then acquire Warburg Pincus’s holding.
The investment firm initially bought a majority stake in Reiss seven years ago partly in order to expand the company across Asia, Australia and North America.
Five years later, it offloaded a 25 per cent stake for £33million to Next, which allowed Reiss’s website and online operations to migrate to Next’s Total Platform e-commerce outsourcing service.
Next subsequently exercised an option in April 2022 to buy an additional 26 per cent equity interest at pre-agreed terms.
Lord Simon Wolfson, chief executive of Next, remarked: ‘Reiss has performed exceptionally well since we first invested in March 2021.
‘This success has been driven by the strength of its brand, first-class management and the benefits of Total Platform; we look forward to continuing to develop the business with Christos and the Reiss team.’
The group said the acquisition would not ‘materially impact’ its underlying pre-tax profits or earnings per share in the current year.
In recent years, Wolfson’s company has bought or forged joint ventures with several distressed retailers, including Joules, Cath Kidston and Victoria’s Secret.
Unlike many high street fashion brands, Next has rebounded strongly since the Covid-19 pandemic started, thanks partly to surging online sales and the collapse of smaller rivals.
Last month, the firm upgraded its annual profit forecasts for the second time this year after warm weather led to a robust end-of-summer sale.
Next shares were 0.5 per cent higher at £70.20 on early Friday afternoon, meaning they have grown by around 29 per cent over the past 12 months.
