Fashion chain Reiss seeks equity investor
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The founder of the high street fashion chain Reiss is exploring a move to bring the first outside investors into the business he founded more than four decades ago.
Sky News has learnt that David Reiss has appointed Morgan Stanley, the Wall Street investment bank, to conduct a review of options which is likely to lead to the sale of a minority stake in the company.
The process, which is at an early stage, is unlikely to lead to a deal until the end of this year or early 2016, according to insiders.
However, the news that Mr Reiss is to consider the sale of part of his company will alert prospective bidders interested in owning a stake in such a prominent high street name.
Reiss has exploited its popularity with celebrity customers for many years, seeing a surge in sales after one of its dresses was worn by the Duchess of Cambridge before her marriage to Prince William in 2011.
Other well-known names to declare their enthusiasm for Reiss’s products include the models Kelly Brook and David Gandy.
People close to the company said on Thursday that a deal could value Reiss at as much as £325m although a precise valuation is unlikely to emerge until a formal process is underway.
That figure would be a lofty valuation for a business which made £9m in pre-tax profit in 2013, although profits are said to have doubled last year and are expected to exceed £25m this year, an insider said.
“The process, which is at an early stage, is unlikely to lead to a deal until the end of this year or early 2016, according to insiders.”
Mr Reiss is likely to seek an investor which can help to facilitate its continued international growth.
The company, whose direct competitors include the likes of Ted Baker and French Connection, trades from approximately 130 stores, 80 of which are in the UK.
Founded in 1971, Reiss has 20 outlets in the US and several in countries such as Hong Kong and Russia.
It recently opened a flagship shop in Toronto, Canada and also has 20 franchise stores in the Middle East.
Reiss, whose revenues are divided broadly equally between menswear and womenswear, sells clothes at higher prices than mid-market retailers but cheaper than many designer fashion labels.
The chain’s founder, who rarely gives interviews, has expressed scepticism about the prospects of rivals who have sold controlling stakes, and people close to his company say that he intends to retain a majority interest in the business.
A stock market listing is also unlikely to be considered, the sources added.
“Owner-drivers have a vision but when you hand the reins down to other people, that drive and vision goes to other people. You have to have someone at the top who has energy, drive and spirit to make things happen,” Mr Reiss told The Telegraph in 2006.
Reiss is chaired by Alan Jacobs, a corporate financier who has orchestrated the sale of a string of well-known retailers.
Questions & Answers
Q.What is the primary reason Reiss is seeking an outside investor?
What is the primary reason Reiss is seeking an outside investor?
Mr Reiss is likely to seek an investor who can help to facilitate the company's continued international growth. This move aims to expand Reiss's presence beyond its current operations in various countries.
Q.How much pre-tax profit did Reiss make in 2013 and what are the profit expectations for this year?
How much pre-tax profit did Reiss make in 2013 and what are the profit expectations for this year?
Reiss made £9m in pre-tax profit in 2013. Profits are said to have doubled last year, and are expected to exceed £25m this year, according to an insider close to the company.
Q.What kind of stake in the company does Mr Reiss intend to sell, and what is his stance on selling controlling stakes?
What kind of stake in the company does Mr Reiss intend to sell, and what is his stance on selling controlling stakes?
Mr Reiss is exploring the sale of a minority stake in the company. He intends to retain a majority interest, having previously expressed scepticism about rivals who sold controlling stakes.
Q.Who has been appointed to review options for bringing in an investor, and when might a deal be finalised?
Who has been appointed to review options for bringing in an investor, and when might a deal be finalised?
Morgan Stanley, the Wall Street investment bank, has been appointed to conduct a review of options. A deal is unlikely to be finalised until the end of this year or early 2016.
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