Next increases stake in Reiss Group to 72% in £128m deal
- Upon completion of the deal, Next will have increased its stake in Reiss to 72%
- Reiss was founded in 1971 as a menswear store in London’s Bishopsgate
- In the past financial year, Reiss’ turnover increased by more than a quarter to £324.6 million
Fashion retailer Next has joined forces with the Reiss family to acquire a significant stake in the Reiss Group.
The two sides have agreed to spend £128 million buying a 34 per cent stake in the luxury clothing chain – which also includes the Duchess of Cambridge – from US private equity giant Warburg Pincus.
Upon completion of the deal, Next will have increased its stake in Reiss Group from 51 percent to 72 percent, with the Reiss family owning a 22 percent stake and the remainder held by Reiss management.
Acquisition: Fashion retailer Next and the Reiss family have agreed to buy a 34 percent stake in the Reiss Group from US private equity giant Warburg Pincus
Founded in 1971 as a menswear store in London’s Bishopsgate district, Reiss’ products are now sold in 266 stores in 18 countries.
In the past financial year, the brand saw turnover rise by more than a quarter to £324.6 million and profit before tax by more than half to £51.6 million.
Sky News reported in June that Next was in talks with Warburg Pincus to auction the company for a potential £500 million deal.
However, some suggested that the FTSE 100 retailer used the process to set a market price and then buy Warburg Pincus’ stake.
The investment company initially bought a majority stake in Reiss seven years ago, in part to expand the company into Asia, Australia and North America.
Five years later, it transferred a 25 per cent stake to Next for £33 million, allowing Reiss’ website and online business to migrate to Next’s Total Platform e-commerce outsourcing service.
Next then exercised an option in April 2022 to purchase an additional 26 percent equity stake on pre-agreed terms.
Lord Simon Wolfson, CEO of Next, commented: ‘Reiss has performed exceptionally well since we first invested in March 2021.
“This success is due to the strength of the brand, the top-notch management and the benefits of Total Platform; we look forward to developing the business together with Christos and the Reiss team.”
The group said the acquisition would have no “material impact” on underlying earnings before tax or earnings per share in the current year.
In recent years, Wolfson’s company has bought or forged joint ventures with several ailing retailers, including Joules, Cath Kidston and Victoria’s Secret.
Unlike many other fashion brands, Next has made a strong recovery since the start of the Covid-19 pandemic, thanks in part to rising online sales and the collapse of smaller rivals.
Last month, the company raised its annual profit expectations for the second time this year after warm weather led to a robust late-summer sell-off.
Next stocks were up 0.5 per cent early Friday afternoon at £70.20, meaning they have grown by around 29 per cent over the past 12 months.