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Envy up for grabs as Alexon plans sell-off

Alexon Group is looking to sell off its menswear arm to focus on its better-performing womenswear brands such as Bay Trading.

It has appointed corporate advisory firm Hawkpoint to undertake a review of its menswear business, which analysts believe will lead to the sale of its 56-store menswear chain Envy to either a trade or private equity buyer.

"A possible sale of Envy is high up on the list," Hawkpoint managing director Christopher Darlington told Drapers. "It has had a tough time, but it's got some reasonable prospects."

Hawkpoint also handled Alexon's sale of footwear chain Dolcis last year (Drapers, December 16).

Envy was acquired in 1999 from Style Holdings and underperformed for several years before showing improvement last year. "It's breaking even on the cash level but is still losing money," said one analyst.

Despite its progress, Alexon would not make back the £30 million it paid for the business, according to analysts. Seymour Pierce analyst Richard Ratner said: "My view is that Alexon will get rid of it and should not have bought it at all."

The sale, which includes its menswear brands Tom Wolfe and Parkes, will allow Alexon to concentrate on its core areas, which fall into two main groups - its older Kaliko and Alex & Co shoppers, and its younger, more trend-conscious Bay Trading customers.

"Bay Trading has great potential for expansion and can grow to 250 shops in three to four years," said an Alexon spokeswoman.

The retailer will open 15 new Bay Trading stores this year, giving it a total of 175.

"Young fashion is a buoyant market," the spokeswoman added. "It is underpinned by a number of strong trends and Bay Trading is sharing in this potential."

In the year to January 27, like-for-like sales at Bay Trading fell 3% but sales picked up in the second half. Alexon made a pre-tax loss of £10.3m, against sales from continuing operations of £325.8m, down 5.7% on 2006.

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