Next says since its initial investment in March 2021, Reiss has performed “exceptionally well”. Next’s Total Platform is expected to accelerate its growth further and enhance the performance of the business following the acquisition.
The transaction is valued at £128m (US$162m) deal and takes Next's ownership in Reiss Group from 51% to 72%.
The announcement follows a period of strong continued growth for Reiss under the leadership of CEO Christos Angelides. In the year to 28 January 2023, Reiss achieved total sales of £324.6m, an increase of 26.4% on the prior year. Profit before tax in the same period was £51.6m, an increase of 50.5% on the prior year.
Elliott Advisors was reportedly one of three parties involved in an auction overseen by bankers at Raymond James. Next refused to comment at the time.
Upon completion of this transaction, the Reiss family’s holding in the company will increase to 22% and the management team will hold 6% equity in the business. Reiss’s results will be consolidated into the Next plc accounts.
Angelides will remain CEO of Reiss and it will continue to retain its own board of directors. Reiss management will retain autonomy and creative independence and the business will continue to be headquartered in London. Reiss’s websites and online operations, both in the UK and overseas, remain contracted to Next through its Total Platform which went live in February 2022 and which has served as a launch pad for Reiss’s growth both in the UK, and overseas.
Simon Wolfson, Next CEO said: “Reiss has performed exceptionally well since we first invested in March 2021. This success has been driven by the strength of its brand, first-class management and the benefits of Total Platform; we look forward to continuing to develop the business with Christos and the Reiss team. Warburg Pincus has been an excellent partner throughout the term of our investment and we have enjoyed working with them during the last two years.”
Warburg Pincus acquired a majority stake in Reiss in 2016.
Adarsh Sarma, managing director and Rianne Schipper, principal at Warburg Pincus said: “Warburg Pincus is proud to have supported Reiss through its growth journey since 2016. We would like to thank Christos, Jonathan and the management team for their unrelenting hard work and commitment - they have done an outstanding job, consistently demonstrating category-leading performance. We have also been delighted by our partnership with Next and the way in which Next's Total Platform has accelerated growth and enhanced the performance of the business.”
What the analysts say
Chloe Collins, head of apparel at GlobalData tells Just Style: "Next is now by far the majority owner of the brand, with a 72% stake, and will co-own the brand alongside the Reiss family and the Reiss management team, with Warburg Pincus exiting. This new, more simplified ownership structure will be beneficial for all parties, with Reiss more able to draw on Next’s retail prowess, and Next reaping greater benefits from Reiss’ strongly growing position within the market.
"The brand’s high quality, classic yet stylish ranges hold strong appeal among consumers who are looking for capsule fashion items that will stand the test of time. As a premium brand, its shoppers have been more resilient amid inflationary pressures, and it will have benefitted from some trading up from the mass market too, as consumers try to buy less and more wisely, for both economic and environmental reasons. Reiss’ priority now will be further international expansion, after significantly strengthening its position within the US market in recent years, and Next is the perfect owner to guide it in this journey.”
