Jack Wills begins search for new owner

Jack Wills owner
// The private equity owner of Jack Wills is searching for a new owner for the retailer
// BlueGem would retain a minority stake
// News comes after reports that Jack Wills was facing a cash crunch and may need to restructure by the end of summer

The private equity owner of Jack Wills has reportedly commenced a search to find a new owner for the retailer.

According to Drapers, BlueGem is soliciting interest for the “right kind of buyer”, but would retain a minority stake in Jack Wills.

Advisors from KPMG, who had been drafted in review the fashion retailer and look at future opportunities, have circulated a document to help stimulate interest in Jack Wills.

“The current investors believe the business can benefit from being part of a larger platform and would welcome the opportunity to retain a minority stake, which allows them to realise value from their investment to date,” the document reads.

The document also outlined ideas to help restore Jack Wills’ profitability.

This included the closure of its Covent Garden branch once the lease expires in March next year, the closure of US stores, and reducing head office salaries to save money.

Drapers reports that one firm has already expressed interest in Jack Wills.

“Management remains focused on its strategy of new product development, improving margins and driving cost efficiencies, which is already reaping benefits,” a Jack Wills spokesperson told Drapers.

The news comes less than two weeks after reports emerged that Jack Wills was facing a cash crunch.

According to The Times, the retailer is burning through a £28 million cash injection from BlueGem and now faced either the need for another cash injection or a restructuring scheme before the end of summer.

Jack Wills revealed a pre-tax loss of £29.3 million for the year to January 31, 2018 according to accounts filed at Companies House earlier this year.

The retailer also suffered an EBITDA loss of £7.5 million, compared to a profit of £6.3 million in the previous year.

Meanwhile, sales declined by 1.1 per cent to £129.3 million.

Since it took control of Jack Wills in 2016, BlueGem has splashed out £18 million on the retailer and arranged an additional £10 million lifeline from Italian businessman Giorgio Girondi.

It also has a £25 million credit line from HSBC, which has some security over Jack Wills’ assets.

Earlier this year, Jack Wills lenders – led by HSBC – reportedly called in advisers from EY to assess the fashion retailer’s financial position.

EY were expected to help negotiate revisions to Jack Wills’ borrowing covenants and examine the retailer’s wider ongoing financing requirements.

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