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Truworths in ‘final stages’ of Office acquisition

South African clothing retailer Truworths is “dotting the Is and crossing the Ts” on a £300m acquisition of UK footwear chain Office, according to sources.

A source close to the situation said the chain was offered to Truworths’ rival The Foschini Group (TFG) several weeks ago with the aim of provoking a counter bid. But after TFG bought 85% of Phase Eight in January this year in a deal valued at £238m, it chose not to make an offer.

Another industry insider confirmed the Office deal is expected to close imminently.

Truworths has a market value of £1.7bn with more than 650 stores in South Africa and 40 in the rest of Africa.

Its own brands include Truworths, Truworths Man, Inwear, LTD and Identity, while it offers the French brand Daniel Hechter under license.

The company’s portfolio also includes specialist chains YDE (Young Designers Emporium), menswear retailer Uzzi, kidswear retailer Naartjie, and leisurewear specialist Earthaddict and Earthchild.

As with many other retailers in South Africa, it generates most of its sales on credit and has been battling rising inflation and unemployment in recent years.

“This deal is as much to do with economics in a tough domestic market and in the face of a depreciating rand as it is to do with fashion and retail,” said one industry source.

“Truworths may want to roll out Office concessions into its stores to boost its footwear offer, but you probably wouldn’t say the two businesses are a natural strategic fit.”

However, he added: “South African retail groups have a lot of appetite for UK and northern European firms at the moment.”

Drapers understands TFG is looking for its next acquisition, expected to be in the UK within three to six months.

Office made sales of £270.2m for the year ended January 25, up 5.5% on the previous year, while EBITDA before exceptional items increased 15% year-on-year to £38.1m, according to the latest results filed at Companies House.

The company had 110 stores in the UK, Ireland and Germany at the end of the year under the Office, Offspring, Poste and Poste Mistress fascia, in addition to 46 concessions in House of Fraser, Selfridges, Topshop and Topman.

The Poste on South Molton Street, London, will close on October 31.

Office declined to comment and Truworths did not respond.

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