Pepe Jeans struggles as Hackett and Façonnable stay weak - report
Jan 31, 2019
Pepe Jeans is facing ongoing challenges as key brand Hackett struggles, Façonnable also deals with falling sales, and as Brexit and other wider issues present particular challenges, according to a Spanish newspaper report. As a result, Pepe is aiming to renegotiate its €250 million loan.
The company was founded in the UK but is now Spain-based, although Britain remains its key market and the problems in that country’s fashion retail sector have been widely publicised and show no sign of easing.
The Hackett label is particularly problematic, El Confidencial reported, and with weak results for its brands meaning the company has breached some of its financial commitments, the firm has allegedly asked its lender BBVA to restructure a loan that had only been renewed 18 months ago.
Although its 2018 results aren’t yet available, last year it said that 2017 had been loss-making and its owners injected €22 million into the company. At the time, the Pepe casualwear label was the only brand in the portfolio to report a sales increase.
But it’s believed that its sales volumes and margins have continued to fall at the company since then, the report said, based on the view of the firm’s auditor, PwC.
It’s reported that as well as brand-specific issues and Brexit woes, the company has been hit hard by general changing consumption habits, by the effect of the weather on seasonal sales and by restructuring costs.
Pepe, which has been owned since 2015 by the Lebanese Mikati family’s M1 vehicle, hasn’t commented on the report.
M1 paid €720 million for the firm, but the newspaper also claimed that it now values it at just €641 million, although PwC said that even this reduced figure is still more than the business’s actual value.
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