NEXT reportedly in advanced talks to acquire Cath Kidston

NEXT is reportedly in advanced talks to buy the Cath Kidston business in its latest swoop on a notable retail brand.

According to Sky News, the FTSE-100 "modern-vintage" chain, which has a market value of approximately £8.7 billion, could wrap up a deal to acquire the modern vintage label as soon as today.

Cath Kidston has been owned by Hilco Capital, the specialist retail investor, for less than a year. It was previously reported that Hilco had been approached by a number of potential buyers for the brand, leading it to consider a sale. Sources have said that the firm is lining up PricewaterhouseCoopers (PwC) to advise on a sale.

London-based Hilco Capital has invested in a number of British retailers, including Homebase, HMV and Bower & Wilkin.

In June 2022, the investment and advisory firm bought Cath Kidston from Baring Private Equity Asia (BPEA). This followed reports that BPEA had instructed PwC to find a buyer for the brand, only two years after it fell into administration with the loss of nearly 1,000 jobs.

BPEA had took full control of Cath Kidston in 2016, after becoming a substantial shareholder in 2014. When when the pre-pack insolvency deal was struck it resulted in the closure of all of the brand’s UK high street stores.

Today, the brand is available online and only operates a handful of outlets, including a flagship in London's Piccadilly.

NEXT's potential acquisition of Cath Kidston would represent another building block in portfolio of owned retail labels. Among the brands it has bought are Made.com, the online furniture retailer, and Joules, the fashion group which collapsed into administration last year.

The business also operates a number of partnerships with brands through its NEXT Total Retail platform. Brands available on the platform currently include Reiss, Gap, Banana Republic and Athleta.

Charles Allen, retail analyst at Bloomberg Intelligence, commented on the news: “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.”

NEXT is set to unveil higher sales and profits as the high street giant hopes to shrug off concerns over consumer spending. The business will reveal on Wednesday how it performed over the financial year, with investors expecting the company to reveal that sales grew by around 6.9% to £4.6 billion.