A trade sale to another retailer would be “the best fit” for Karen Millen, industry experts have told Drapers.
The premium womenswear retailer’s Icelandic parent company, Kaupthing, formally launched a sale process for the business last week. It comes after its management team appointed consultancy firm Deloitte earlier this month to consider options for the business, following a string of takeover bids.
A Karen Millen spokeswoman said: “Following a recent wide-ranging review, it has been concluded that a sale of Karen Millen represents the best way forward for the business. A sale process has now been initiated and is being managed by Deloitte. It would be inappropriate to comment further at this stage.”
“TFG would be the best buyer for Karen Millen, as it sits with other premium brands, such as Whistles,” the managing director of one premium brand said.
“It makes sense for the retailer to be bought by a group, and not a bank, so they can save costs by sharing back-office systems, and get economies of scale on sourcing, logistics and warehousing.”
The former CEO of a premium womenswear retailer agreed: “Karen Millen’s margin at 50% would be a concern to the likes of Foschini.
“However, they do have the talent and the infrastructure to make the numbers work, by sharing all support functions and leveraging their buying power.
Karen Millen, who founded the company in 1981, told Drapers that she hopes “it finds a buyer that will give it all the help and support it needs with the vision to position it back where it belongs, and not let it fall towards being a fast [fashion] clothing chain with no point of difference.”
Several sources said its new owner needed to trim down its store estate and focus on ecommerce.
One retail analyst said: “In terms of turning the business around, it is a recalculation of USP, a focus on ecommerce and more interaction with customers to establish a real brand connection, which used to be there but has – in my view – declined over recent years.”
The former CEO of one retailer agreed: “There is a place in the market for the brand, but the key will be potentially reducing the number of stores, and analysing profitability UK and internationally. Like most retail brands now, its needs to be light on real estate and investing in digital.
“Its pricing architecture also needs reviewing. In some cases they are higher than Ted Baker on comparable product.”
The retailer reduced its operating losses by 85% to £1.4m in the year to February 2018 under a turnaround strategy led by chief executive Beth Butterwick.
TFG has been contacted for comment. Karen Millen declined to comment.