By Elias Jahshan from Retail Gazette
- Mike Ashley’s Sports Direct reportedly in pole position to make a swoop on Jack Wills
- Ashley was reportedly locked in a bidding war with Edinburgh Woollen Mill Group owner Philip Day over the weekend
- Jack Wills was put up for sale last month by owner BlueGem
Mike Ashley is reportedly on the verge of agreeing a takeover deal of Jack Wills after a coming out in pole position from a bidding war with Philip Day.
According to Sky News, Ashley’s retail empire Sports Direct is now thought to be the frontrunner to make a swoop on Jack Wills.
Meanwhile, Drapers reports that a deal is likely to be in the form of a pre-pack administration and could be announced as soon as on August 5, 2019.
Just before the weekend, news emerged that Sports Direct and Edinburgh Woollen Mill (EWM) Group, which is owned by Day, were locked in a two-way bidding war for the preppy fashion retailer.
It comes after BlueGem, Jack Wills’ parent company, drafted in advisors from KPMG earlier this year to review the business and look at future opportunities.
Last month, the sales process for fashion chain was kicked off when the KPMG advisors began circulating a document to help stimulate interest.
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’ 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 GBP 14 million.
This compared to a profit of GBP 2.2 million the year prior.
It also posted an EBITDA loss of GBP 7.5 million in the period, compared to a profit of GBP 6.3 million in the previous year.
Meanwhile, sales declined by 1.1 % to GBP 129.3 million thanks to a “challenging year”.
The retailer also reconfirmed a GBP 25 million revolving credit facility, a GBP 4 million trade finance facility and a GBP 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 GBP 20 million injected by private equity owner BlueGem.
The retailer’s lenders were also warned they could be left GBP 30 million out of pocket if Jack Wills fails to find a buyer to take over.
KPMG and Jack Wills have declined to comment. Sports Direct and Edinburgh Woollen Mill have not yet provided comment.