Next said Wednesday that it has acquired the shares in Reiss, which sells men’s and women’s wear at contemporary price points, from existing shareholders. Reiss was valued at 200 million pounds.
Next, which operates a chain of physical stores and which has been transforming itself into an online platform for third-party brands in the vein of Amazon, said it will make an equity investment of 33 million pounds, and a debt investment of 10 million, financed from its own cash resources.
Under the terms of the agreement, Next has an option to acquire an additional 26 percent interest in Reiss at pre-agreed terms. If exercised the new stake would take its holding to 51 percent. The option falls away after July 2022.
Shares in Next closed up 0.6 percent at 75.62 pounds on the London Stock Exchange on Wednesday.
Reiss was founded in 1971 by David Reiss, originally as a men’s wear brand. It produces and sells men’s and women’s clothing and accessories. In May 2016, the private equity firm Warburg Pincus acquired a majority stake, with the Reiss family retaining a minority holding.
In the year to Feb. 1, 2020, Reiss posted turnover of 227.4 million pounds through all its sales channels, an increase of 22 percent on the prior year.
Simon Wolfson, Next’s chief executive officer, called Reiss “an outstanding brand with enormous potential and a first-class management team. We are excited to see what can be achieved through the combination of Reiss’ exceptional product, marketing and brand building skills with Next’s Total Platform infrastructure.”
Christos Angelides, Reiss CEO, said the new partnership will be “transformational for Reiss’ operational effectiveness. Next’s infrastructure will ensure Reiss is not only more efficient as a business, but more effective at serving its customers directly through Reiss stores, at reiss.com and through its worldwide partners.”
Next had been mooted as a frontrunner to buy Topshop, but pulled out of the race, saying it was unable to meet the “price expectations” of the vendor. It was also said to be interested in buying Thomas Pink, although it stepped away from that sale process, too.
According to unconfirmed media reports, former JD Sports executive Nick Preston has acquired Pink from LVMH Moët Hennessy Louis Vuitton, along with a group of North and South American investors. All parties have declined to comment on the reported sale.
Due to Wolfson’s steady hand and meticulous oversight of the business, Next has become one of Britain’s few high-street retailers that’s managed to juggle physical with digital to great effect.
Although Next has been around for decades, it has also adapted nimbly with the times, becoming the U.K. distribution partner of Victoria’s Secret and Laura Ashley home, and making way for a raft of beauty brands online and offline.
Based in Leicester, England, Next has 500 stores in the U.K. and Ireland and an online presence in more than 70 countries. The online platform sells Next products as well as 700 other fashion, home and beauty brands, including Reiss.
Next will report financials for fiscal 2020-21 in April, and said it expects full year profit before tax to be 342 million pounds. In the previous year, group sales were 4.4 billion pounds, while full year profit before tax was 729 million pounds.
As part of the investment, Reiss’ websites and online operations, both in the U.K. and overseas, will be contracted to Next through Next’s Total Platform.
Next said Total Platform will also provide warehousing and distribution services for Reiss’ retail, franchise, wholesale and concession businesses, all of which will continue to be operated by Reiss. It is anticipated Reiss will go live on Next’s Total Platform in February 2022.
Angelides was appointed CEO of Reiss in 2017 and will remain in that role. He had worked for Reiss for nearly three decades, serving 14 years on the board as group product director.
Reiss will retain its management autonomy and creative independence. It will have its own independent board of directors and continue to be headquartered in London.
Next said the intention is for its infrastructure, online systems, warehousing, distribution assets and sourcing base to serve as a launch pad for Reiss’ growth plans, both in the U.K., and internationally.
Reiss operates in 14 countries from 79 stores, 104 concessions and via wholesale and franchises. It has more than 257 points of sale in 14 countries across the U.K., U.S., EMEA and APAC regions.
Last March, shortly before countries locked down due to COVID-19, Reiss announced plans to delve deeper into the U.S. market with 14 new points of sale set to open last year at Bloomingdale’s and Nordstrom.
The U.S. had been one of Reiss’ standout geographies in 2019, after the company opened 29 points of sale in the region.