Aurora chief Mike Shearwood set to pick up womenswear retailer if it is placed into administration
Aurora chief executive Mike Shearwood is believed to have met this week with PricewaterhouseCoopers, which is leading an accelerated sale process for the women’s young fashion chain.
According to sources, Shearwood could pick up the business slimmed down and at a bargain price should Jane Norman’s banks be forced to place it into administration if no buyer is found.
Any deal is likely to depend on Debenhams, which has Jane Norman concessions in its department stores and has a change of ownership clause. The concessions are Jane Norman’s most profitable outlets.
Debenhams is also reportedly a frontrunner to buy Jane Norman should it hit the buffers but sources close to the process told Drapers it was likely there was little stock left within Jane Norman to trade. Debenhams’ willingness to acquire other struggling concessions out of administration - such as the assets of footwear brand Faith in 2010 and womenswear chain Principles in 2009 - depended on its ability to continue to trade the stock.
A successful deal could therefore be reliant upon Debenhams’ readiness to relax minimum guarantees on turnover generated from Jane Norman concessions in the immediate term while stock levels are rebuilt.
In the event of a deal, Jane Norman is likely to continue to be run as a separate entity to Aurora’s chains. It sits lower in terms of positioning and pricing than any of the Aurora chains but Shearwood could leverage economies of scale.
Aurora already operates some co-located stores in overseas locations although Shearwood is likely to want to shed underperforming stores from Jane Norman’s 200 UK and Republic of Ireland store portfolio, something which an administration process would achieve.
Sales and profits at Jane Norman have fallen off in recent years, with management admitting it had become “stale”. Managing director Ian Findlay, who left the business earlier this month, had put in place a plan to turn around the business by making it more fashion conscious and targeting a younger customer.
In the year to March 27, 2010, profits stabilised with EBITDA at £15.3m. It followed a halving of EBITDA to £15.8m the previous year. Its woes are thought to have continued amid dire high street trading conditions.
Like Aurora’s previous incarnation, Mosaic Fashions, Jane Norman’s ownership history has been troubled. Both Mosaic and Jane Norman were part-owned by now-defunct Icelandic investor Baugur and nationalised Icelandic bank Kaupthing.
A syndicate of 15 banks now majority owns the business. It breached its covenants on a £5.2m loan in January 2009, resulting in it renegotiating its banking facilities with the consortium.
The Icelandic connection is not the only link Jane Norman has with Aurora. Former Aurora chairman Stewart Binnie became chairman of Jane Norman in 2010.
It would not be the first time that the Aurora team ran a business outside of the Aurora umbrella. In March it spun off premium womenswear chain Karen Millen from its portfolio of chains as a separate entity because its global expansion plans meant its funding requirements were different to the rest of Aurora. Derek Lovelock remained chairman of Aurora but also became executive chairman of Karen Millen.
A source close to the situation said: “I suspect there are a number of people looking at Jane Norman but there are a challenging number of unknowns. It is still for sale but there is not much stock in the pipeline and there is a seriously depleted management team. I’m not sure how long the banks will continue to support them.”