// Jack Wills sold to Sports Direct for £12.75m in a pre-pack administration deal
// Mike Ashley’s retail empire beat Philip Day’s Edinburgh Woollen Mill Group in the bidding war
// 1700 Jack Wills staff and its distribution centre would be transferred to Sports Direct
Jack Wills has been sold for £12.75 million to Mike Ashley’s Sports Direct via a pre-pack administration deal, ending a bidding war with Philip Day’s Edinburgh Woollen Mill Group.
Yesterday afternoon, Will Wright and Chris Pole from KPMG’s restructuring practice were appointed joint administrators to Jack Wills.
READ MORE:
Immediately after their appointment, Jack Wills’ brand and UK trading assets was sold, debt-free, to Sports Direct – a process commonly known as a pre-pack administration deal.
As part of the pre-pack deal, all 100 Jack Wills stores in the UK and Ireland, as well as the distribution centre and all 1700 employees, will transfer to Sports Direct.
Jack Wills will come under a new division established at Sports Direct which will focus solely on buying and building fashion and sports brands, and report to Michael Murray in his role as head of elevation.
“Jack Wills will continue to operate as a separate company with its own leadership team,” Murray said.
“Our role will be to support the business and help elevate the brand and help restore it to its former glory.”
Meanwhile, directors are currently assessing options for the international arm of Jack Wills, which trades in the US, Hong Kong, Singapore, Kuwait, Saudi Arabia and via ecommerce in 130 countries.
Sports Direct and Edinburgh Woollen Mill (EWM) were both the two remaining bidders in the race to acquire Jack Wills, after private equity owner BlueGem put the preppy fashion retailer up for sale last month.
While Ashley’s retail empire emerged as the likely winner over the weekend, EWM reportedly placed an 11th-hour bid on Jack Wills yesterday with the aim of avoiding a pre-pack administration.
KPMG said Jack Wills had “recently experienced mounting cash flow pressures amid some of the most difficult trading conditions seen on the high street in years”.
Jack Wills chief executive Suzanne Harlow said: “For the past year, we have been focused on improving the Jack Wills proposition and the group’s financial performance.
“Despite significant progress, the challenging trading environment led us to conclude that the company’s long-term future would be best served as part of a larger group and Sports Direct will enable us to do this.”
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”.
The retailer also 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 had been rife that Jack Wills was running short of cash after burning through more than £20 million injected by private equity owner BlueGem.
Ashley recently raised a few City eyebrows after the delayed publication of Sports Direct’s most recent annual results, which recorded a six per cent fall in group underlying EBITDA to £287.8 million on the back of sales of £3.7 billion.
That report also saw him announce that his purchase of House of Fraser last summer may have been a mistake, while further store closures were likely to take place.
Click here to sign up to Retail Gazette’s free daily email newsletter
