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Indie chain Limeys snapped up by Icelandic investor after collapse

Private equity fund KCAJ has bought mini-chain Limeys for what is believed to have been a knock-down price of between £1 million and £2m, after it collapsed last week.

KCAJ, the fund through which Icelandic private equity group Arev invests in retail businesses, snapped up Limeys after it went into administrative receivership on May 23. It will now be run by the management of Scottish chain Cruise, which Arev bought in September for £7m.

Cruise would not confirm whether there were plans to cut jobs or close any outlets, or whether it planned to alter brands on offer at either store following the sale. Both businesses operate in the premium branded menswear and womenswear markets.

The company said all stores would continue to trade under the Limeys fascia, but commentators were sceptical. The owner of one branded independent said he expected the chain to rebrand as Cruise over time. "It makes sense. Cruise said it wants to grow the business and this way it can," he said.

Industry sources told Drapers the Limeys deal was turned around within a week. A spokesman for receiver Kroll said Limeys' problems came as a result of "difficult trading conditions in the retail sector". Limeys was said to have had outstanding debts to suppliers. A source added: "It was sold for between £1m and £2m and Cruise has told labels it will honour outstanding monies."

Limeys had five menswear stores, in Derby, Leicester, Sheffield, Nottingham and Birmingham, as well as two womenswear boutiques in Derby. It sold menswear brands including Hugo Boss, Stone Island and Paul Smith, and women's brands such as Superfine and Velvet.

Cruise has 10 stores, in Glasgow, Edinburgh, Chester, Newcastle upon Tyne and Harrogate, and plans to open in Belfast's Victoria Square shopping centre in spring 08. It stocks premium labels such as Gucci, Prada, and Dior, but there will be crossover between the two chains on some brands including Stone Island.

Industry sources expected the buying teams to merge. But a spokesman for one label said: "If it decides to cross-buy, it could be a problem. All of a sudden, we may have extra distribution and that could be a conflict of interest."

Cruise has ambitious growth plans and its management had drawn up a hit-list of desired locations south of its Scottish heartland. A source added that the deal had ended acquisition talks between Cruise and independent chain Flannels, due to crossover in locations.

Limeys managing director Roger Wilkinson was unavailable for comment. Cruise and Arev declined to comment further.

CRUISE AND LIMEYS: HEAD TO HEAD

- Cruise

Sales: £16.7 million

Loss before tax: £148,500

Operating profit: £45,205

Gross profit: £7.6m

- Limeys

Sales: not disclosed

Loss before tax: £241,000

Operating loss: £134,000

Gross profit: £5.2m.

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