Your browser is no longer supported. For the best experience of this website, please upgrade to a newer version or another browser.

Your browser appears to have cookies disabled. For the best experience of this website, please enable cookies in your browser

We'll assume we have your consent to use cookies, for example so you won't need to log in each time you visit our site.
Learn more

Adams seeks parental guidance

Potential buyers of the Adams chain must decide if the high street needs a kidswear specialist

Some of the biggest names in retail fashion have been suggested as potential buyers of kidswear chain Adams Kids after its owner, Myriad Childrenswear Group, was put up for sale last month.

The likes of Baugur, Arcadia, Mothercare and H&M have been named as potential suitors. But after Adams made a loss of £13.8 million on sales of £215.4m in 2005, it is difficult to see how the Adams proposition can continue to have a place on the high street.

The director of one young fashion chain believes that the existing Adams business is failing to resonate with customers. He predicts that kidswear specialists will struggle to survive and that the market is splitting into three profitable categories: supermarkets, family stores - which offer kids’, men’s and women’s clothes, such as H&M, New Look, Marks & Spencer and Next - and top-end branded retailers.

In his view, Adams does not have a place in that vision of the market, so its future looks bleak. “We offer everything from kidswear through to maternitywear, womenswear to menswear, footwear to accessories,” he says. “We have a strong family offer, as do other retailers such as H&M. A property deal for Adams is unlikely and who would want to buy it for the brand?”

The kidswear market - which has increased by an estimated 1.9% to £4.39 billion in the past year, says Verdict Research - will continue to be challenging for kidswear specialists and middle market players such as Adams. A holistic approach will be essential for survival, says Verdict analyst Maureen Hinton. “Parents buy kids’ clothes at supermarkets because it’s cheap, convenient and is a child-friendly environment,” she explains. “Mothercare is doing well because it offers more than just clothing and is looking to grow its brand abroad. For middle market retailers, branding will be a key feature, with an emphasis on value, fashionability and quality.”

With high street retailers such as Next still dominating the market, supermarkets and value retailers now taking a 33% market share in total, and businesses such as House of Fraser and John Lewis improving their offers, there is less space for a middle market specialist.

House of Fraser has gone down the branding route to differentiate itself from competitors and maintain market share. “Two years ago kidswear was going nowhere, but we’ve turned it into a robust business,” says HoF menswear and childrenswear director Allan Winstanley. “We’ve tidied up our portfolio through shopfits and brand identity and by reducing the number of labels we stock.”

Meanwhile, John Lewis director of buying for childrenswear Helen Keppel-Compton says the department store’s success in kidswear lies in the breadth of its offer. “Much of our ability to differentiate comes from the fact that we are the only one-stop shop for parents buying for their children. We don’t just offer clothing - we also fit children’s shoes and sell toys and nursery furniture. We have a strong own-brand kidswear proposition that offers individual, exclusive product with quality and fashionability at its core.”

Talk of what a new owner could do with Myriad has varied from reinventing the Adams business to splitting up the group’s assets, which include retail, manufacturing and brand licensing. Another alternative is to use Adams as an add-on to an existing adult clothing business.

Some sources also suggest that potential buyers could be interested in the group’s property portfolio, which includes 330 Adams stores in the UK and Republic of Ireland. But with shops averaging just 2,000 sq ft, the floorspace may be too small to interest the big clothing players.

One private equity player concedes that Myriad’s businesses could fuel interest from the sector. “A company such as Hilco may be attracted to the group because it has a good record of buying businesses and splitting up their assets. But I can’t see too many other buyers knocking on the door,” she admits.

However, another source says that potential buyers should not ignore the value of Myriad’s kidswear design and sourcing capabilities.

“It is definitely a company worth buying - at the right price. Adams is one of the few kidswear specialists and potential buyers should look to leverage that into their own environments. There are many retailers that have a kidswear offer, but they don’t do it very well. Companies could make the most of Adams’ expertise as a bolt-on to their business.” One source close to Myriad says the group is looking for a quick sale after staff turnover at head office reached almost 50% over the past two years.

An insider at Icelandic investment group Baugur, which has shown a healthy appetite for buying UK companies, refuses to be drawn on whether its rumoured interest in Adams is true. “Myriad has been failing for a while, but some parts of the group are doing well,” he says. “It has a complex portfolio. Whoever buys it will need to be the sort of firm that enjoys the challenge of turning companies around completely.”

Have your say

You must sign in to make a comment

Please remember that the submission of any material is governed by our Terms and Conditions and by submitting material you confirm your agreement to these Terms and Conditions. Links may be included in your comments but HTML is not permitted.