Next confirms Cath Kidston acquisition for £8.5m
Next has confirmed its widely expected purchase of the Cath Kidston brand. In the briefest of stock exchange announcements the company said that it has agreed to buy the “brand name, domain names and intellectual property of CK Acquisitions Ltd from the administrators for [a] consideration of £8.5 million”.
It added that the “cathkidston.com domain will be licenced back to the administrators for a period of up to 12 weeks to effect stock clearance, prior to relaunch under the company's ownership”.
The brand had been put up for sale by owner Hilco last month, only eight months after the turnaround specialist bought it.
The latest buy follows Next’s recent purchase of two other distressed retailers, Joules and Made.
The Cath Kidston buy came as no surprise having been widely flagged on Monday and analysts said on Tuesday that the purchase makes good sense for Next.
Charles Allen, retail analyst at Bloomberg Intelligence, said: “Next's strategy is to build its ‘Total Platform’ business where it can operate a brand on its label website and do all the fulfilment from its warehouses. This is to broaden the appeal of its own offering as more consumers are likely to be attracted by the greater choice. Next can also provide its consumer credit to help with purchases. Cath Kidston is a distinct brand that appeals in ways that Next's core brand doesn’t.”
However, he added that “currently, Next doesn't have the warehouse capacity to add more brands to Total Platform but will later in the year. Any deal is therefore likely to postpone integration until there is room in the fulfilment facilities.”
We already know that the administrators will be operating a clearance programme that's set to run until June. After this, it’s unclear whether Next will continue to operate the brand’s flagship store on London’s Piccadilly.
We could hear more on Wednesday with Next set to reveal its annual results in the morning.
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