Jack Wills' AW16 collection

LONDON – British high street brand Jack Wills has a new investor, BlueGem Capital Partners LLP, the private equity owners of Liberty of London.

BlueGem has teamed with Peter Williams, the founder and chief executive officer of Jack Wills, to form an investment vehicle known as Union Lifestyle Limited, which now owns 100 percent of Jack Wills Group.

The partners said “significant” new capital has been invested to facilitate growth of the Jack Wills brand in the U.K. and internationally. The terms of the deal were not disclosed, and Inflexion, the long-term investor in Jack Wills, has now officially exited the company.

Jack Wills has struggled in recent years to remain relevant to its teens and Twenties demographic – a famously fickle audience – against a backdrop of increased competition on the high street from international fast-fashion giants and savvy discounters. The brand has also repeatedly fallen foul of Britain’s Advertising Standards Authority for its risqué catalogue images.

“The transaction with BlueGem is very exciting and the new capital allows us to continue our international expansion and fast paced revival,” said Williams, who founded Jack Wills in 1999, and returned to its helm one year ago, having stepped aside and served as a non-executive director while a former management consultant ran the business.

“We are focused on strengthening and growing our presence in the U.K. and overseas and are opening 13 new stores. We are now shipping online to over 80 countries worldwide. My primary focus, as it has always been, is on innovation with the Jack Wills brand and making very high quality product that we love.”

Derek Lovelock, executive chairman of British high street chain Mamas and Papas, has joined as non-executive chairman. The company has also just launched the initiative “Fabric-of-Jack,” to highlight its sourcing practices. Jack Wills has regularly relied on British-made tailoring fabrics.

Williams described Fabric of Jack as “a new initiative to increase the transparency of the supply chain. We care about the provenance and the quality of our clothing and products and, because we are proud of our long-standing supplier relationships.”

The privately held company also released some numbers for the fiscal year ended Jan. 31. Turnover was up 4.1 percent to 137.4 million pounds, or $208.8 million. EBITDA, or earnings before interest, taxes, depreciation and amortization, and before exceptional items, dropped 42 percent to 5.1 million, or $7.8 million.

Gross margin decreased to 58.3 percent from 60.8 percent as a result of stock clearances.

All figures have been converted at average exchange rates for the 12-month period.

The company admitted that performance in the first half of the last fiscal year was impacted by continued disruption relating to a decision taken in September 2014 to outsource the group’s distribution operations to an external logistics provider.

The transition resulted in “significant operational disturbances to inventory systems and processes throughout 2015,” and it continued to impact performance in the first half of 2016, Jack Wills said.

The company subsequently decided to bring the operation back in-house, a process that was completed by the end of 2016. It said those operations are now running smoothly, and the previous issues have been resolved. Costs relating to the transition have been treated as exceptional items.

Jack Wills opened four new stores in 2015-16 and refitted five, bringing the total of wholly-owned stores to 81. There are 66 in the U.K., eight in the U.S., five in Hong Kong, and one each in Singapore and Macau.

“The underlying financial health of Jack Wills is strong,” added Williams. “The performance of the business during 2015/16 shows a real year of two halves, with a dramatic improvement in profitability in the second half. The numbers clearly show that momentum has returned and significant results are being delivered. Importantly, this improvement in trading has continued into the first half of the current year.”

BlueGem is a mid-market private equity manager established in 2007. It invested in Liberty in 2013, and plans to take the store public within the next two years. Its focus and sector expertise is on branded, consumer facing businesses and strategic distribution platforms.

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