Moss Bros, the menswear group, is to sell its 15 Hugo Boss franchised stores to Hugo Boss UK for £16.5m and said that sales were strong over Christmas.
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Hugo Boss UK will buy the business and assets of the stores as a going concern if shareholders back the deal at a General Meeting at the end of the month. The deal is due for completion on April 1.
Like-for-like sales rose 7% over the 26 weeks to January 29 at the group which has said that it would focus on its own brand operations to drive growth. Like-for-like sales for the year to the same date rose 9.1% and sales and margins “continue with a positive like-for-like trend” Moss Bros said in a statement.
Upon approval and completion of the deal with Hugo Boss UK, £4.2m will be paid in cash to Moss Bros, with the remaining £12.3m being paid in instalments upon the transfer of the leases, which is expected to take place by the end of December. Moss Bros will continue to sell Hugo Boss branded clothing through its Moss and Cecil Gee chains.
The cash will be used to redevelop Moss branded stores, invest in service in stores and the pilot and potential roll-out of new initiatives such as Moss Bespoke and the development of its hire business.
The cash will also provide Moss Bros with working capital so as not to need to renew its banking facilities and operate debt-free.
Moss Bros chief executive Brian Brick, said: “This is a transformational deal for Moss Bros and absolutely in line with our recently developed strategy of focusing on growing our own brands.
“Having restored the quality of the product offering of the core Moss Bros business and established a strong momentum in positive like-for-like sales, this transaction will give us the opportunity to focus exclusively on investing and developing the brands which we own, from a position of operational and financial strength.