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WeSC buys up UK distributor to boost margins

Swedish streetwear brand WeSc has bought its UK distributor Lateral Corp for an undisclosed sum, as it looks for ways to make greater margins.

The Swedish brand, which has around 2,000 doors in 24 countries and a turnover of around £45m, has taken over Lateral Corp, its UK and Ireland distribution operation, its sales force, management, warehouse operations and the two London WeSc stores it owns.

Chief executive Greger Hagelin explained that integrating the two companies would cut out the margins taken along the distribution and retail path and enable the business to take “greater risks”.

He said: “One thing is the price structure in the UK. You need to cut one away one of the [distribution, retail or wholesale] margins and be able to act faster. It’s been difficult for Lateral Corp to invest in development – warehousing, logistics, marketing - or take risks to fulfill orders from bigger accounts.”

Lateral Corp will drop the two other brands it has represented, Tellason Jeans and Frends headphones. Entrepreneur and Dragon’s Den panelist Deborah Meaden, who invested in the company in 2008, no longer has involvement in the business, following the WeSC acquisition.

Hagelin said he expects trading this year to be tough, with just minor growth forecast. The business has grown roughly 15% every year since its launch in 1999. The 11% growth in EBIDTA last year would be hard to reach this year, Hagelin said. The business has been affected by having to sell at discount, as well as the strength of the Swedish Krona.

Following the acquisition, WeSC now controls the distribution of seven of its ten largest markets. It now runs operations in Sweden, the US, Denmark, Norway, the UK, Germany and Austria.

Lateral Corp had worked with WeSC in the UK since 2001, running its distribution and two London stores. 

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