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Hobbs ‘primed for sale’ by owner 3i

Private equity firm 3i is reportedly planning to offload Hobbs after more than a decade of ownership.

The premium womenswear retailer carries a price tag of £80m and investment bank NM Rothschild has been approached to handle the sale, The Sunday Times reported.

3i bought Hobbs for £111m in 2004, but by January 2014 the value of its 47% stake in the company had dropped to £21m. Later that year, womenswear veteran Meg Lustman was appointed as chief executive to lead a turnaround.

Lustman has focused Hobbs’ collections on three end uses - workwear, occasionwear and smart casual - while expanding its range of trans-seasonal pieces to better suit unpredictable weather. She has also been expanding the chain internationally, with new concessions in the US and Germany.

Turnover fell 5.7% to £109m in the year to 30 January, but EBITDA rose 18% to £ 7.7m thanks to its strategy to reduce discounting and sell more at full price.

Independent retail analyst Richard Hyman told Drapers: “Hobbs has a top notch CEO and chairman but it’s been finding life very difficult. It faces competition from Jaeger, Jigsaw, L.K Bennet, Phase Eight to a degree, even M&S is bound to be a competitor. Its section of the market has become very crowded.”

He continued: “Hobbs is a sound operator and has strengths in tailoring and a good brand name but it has become very dependent on the promotional drug.”

Hobbs declined to comment on the sale rumours, and 3i did not respond.

 

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