NEXT expands third-party brand empire as it agrees to buy Cath Kidston out of administration

NEXT has further expanded its third-party empire having agreed to buy fashion and homeware brand Cath Kidston out of administration.

The high street giant told shareholders today that it will buy the brand name, domain names and intellectual property for the business for £8.5 million,  its remaining stores will be closed and some redundancies will be made.

CK Acquisitions, the registered company behind Cath Kidston, hired administrators from PwC to oversee the insolvency earlier today and speculation mounted that NEXT would step in to buy the brand.

The administrators said that there “will be redundancies” at the business, which currently employs 125 people, but did not disclose how many would be immediately affected.

Cath Kidston's remaining stores in London, Ashford, Cheshire Oaks and York will stay open to sell current stock before being closed permanently.

Administrators said the business sought a rescue takeover as the retail sector “continues to be exposed to testing market conditions”.

The deal comes almost three years after Cath Kidston previously fell into administration, with the loss of nearly 1,000 jobs and almost of all of its stores. The brand was however saved and was snapped up by turnaround specialist Hilco Capital, less than a year ago.

Its takeover is part of a recent spree of takeover deals by NEXT for stricken brands, having bought Made.com and Joules last year. NEXT also acquired a majority stake in premium fashion brand Reiss and runs the UK businesses of US giants Victoria's Secret and GAP. All these brands now operate on NEXT's 'Total' retail platform.

Zelf Hussain, joint administrator and partner at PwC, said: “Cath Kidston is a well-loved lifestyle brand founded in 1993 and I am pleased to say that it has been bought by NEXT who will make sure it continues to flower under their ownership.

“The company has over recent years navigated through incredibly challenging market conditions including the pandemic restrictions, and most recently the decline in consumer spending driven by cost-of-living pressures and rising costs.

“In the short term its four stores will continue to remain open whilst operations are wound down.

“Sadly, there will be redundancies during this period of wind down and we will continue to support the staff throughout this period.”

As part of the agreement, the cathkidston.com domain will be licensed back to the administrators for up to 12 weeks to allow stock to be cleared before the brand is relaunched under its new ownership.

Charles Allen, retail analyst at Bloomberg Intelligence, commented on the deal: “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. 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 should expect to hear more in Next’s earnings tomorrow.”