// Mike Ashley’s Sports Direct & Philip Day’s Edinburgh Woollen Mill reportedly the last remaining bidders for Jack Wills
// Jack Wills was put up for sale last month by owner BlueGem
// It recently swinging to a loss and is reportedly hurtling towards a “cash crunch”
Mike Ashley and Philip Day are reportedly the last remaining bidders for Jack Wills, which was put up for sale last month.
According to Sky News, Sports Direct and Edinburgh Woollen Mill (EWM) Group – owned by Ashley and Day respectively – are the two remaining bidders and a decision could potentially be made in the coming days.
Jack Wills owner BlueGem and advisers were also reportedly considering selling the preppy fashion retailer through a pre-pack administration, Sky News said.
It’s believed that a substantial restructuring of the retailer was “inevitable”, regardless of the outcome of the bidding war between Sports Direct and EWM.
Jack Wills’ most up-to-date accounts at Companies House, covering the financial year to January 28 last year, showed that it had swung to a pre-tax loss of more than £14 million.
This compared to a profit of £2.2 million the year prior.
It also posted an EBITDA loss of £7.5 million in the period, compared to a profit of £6.3 million in the previous year.
Meanwhile, sales declined by 1.1 per cent to £129.3 million thanks to a “challenging year”.
Advisors from KPMG had been drafted in earlier this year to review the fashion retailer and look at future opportunities.
The retailer reconfirmed a £25 million revolving credit facility, a £4 million trade finance facility and a £1.8 million overdraft with HSBC until January 2021.
However, recently speculation has been rife that Jack Wills was running short of cash after burning through more than £20 million injected by private equity owner BlueGem.
The retailer’s lenders were also warned they could be left £30 million out of pocket if Jack Wills fails to find a buyer to take over – a process BlueGem kicked off last month.
EWM reportedly put in an initial bid, which was followed by other rumoured suitors such as Sports Direct, Crew Clothing and Ben Sherman parent company Marquee Brands.
It is unlikely that BlueGem would see a return from Jack Wills’ sale, and the future of Suzanne Harlow’s job as chief executive is unclear.
Jack Wills, KPMG, Sports Direct and EWM have not yet provided a comment.
The news comes almost a week after Sports Direct’s controversial full-year trading update, which sent shockwaves in the City after it was delayed by almost 10 hours.
Sports Direct’s results were also initially due for publication on July 18 but this was postponed to July 26.
Once the results were published, almost an hour after the stock market had closed, it showed a €674 million (£605 million) tax bill from Belgium.
The firm also expressed regret over acquiring House of Fraser and indicated more store closures were on the way after the department store chain booked a loss of £54.6 million.
Ashley’s retail empire reported a six per cent drop in group underlying EBITDA to £287.8 million, but underlying pre-tax profit grew five per cent to £143.3 million.
Group sales for same period climbed 10.2 per cent to £3.7 billion, but for its key retail business – which trades under the Sports Direct chain – sales rose by just 0.3 per cent to £2.19 billion.
On a like-for-like basis, which excludes new stores, sales fell 1.6 per cent.
During the year, Sports Direct acquired not only House of Fraser, but also Evans Cycles and Sofa.com.
It also attempted to takeover Debenhams, HMV and Patisserie Valerie, but failed.
It is now in the process of acquiring Game.
Sports Direct’s main rival in the race for Jack Wills has had a more successful run of acquiring distressed retailers.
EWM recently took over Bonmarche, and in recent years it acquired and successfully turned around the likes of Jaeger and Austin Reed.