According to recent reports, Next and its US partner Davidson Kempner are leading the race to acquire the collapsed retail empire Arcadia. This potential deal would mark another important milestone for Next, as the company has been aggressively expanding its portfolio in recent years. In just the past year, Next has launched a standalone premium beauty chain, acquired the Laura Ashley and UK Victoria’s Secret operations, and become the lingerie and nightwear licensee for Ted Baker.

Several newspapers have identified Next as the top bidder for Arcadia, with the deadline for final bids set for Monday. However, Next is expected to face competition from other interested parties, including Authentic Brands Group/JD Sports consortium, Boohoo Group, and Frasers Group.

The intentions of these bidders regarding the future of the Arcadia stores differ. While Boohoo’s bid could potentially lead to store closures, Next’s plans for the Arcadia stores remain uncertain. Reports suggest that Next may link store rents and other costs to profitability, which could result in the closure of some stores. Additionally, Next may not be interested in maintaining all of the Arcadia chains, particularly Wallis and Outfit, which are considered to be at risk. Next CEO Simon Wolfson has previously emphasized the company’s focus on high-quality brands, indicating that Next may only be interested in certain brands within the Arcadia portfolio. Similar to its agreements with Victoria’s Secret and Laura Ashley, Next could potentially operate physical stores and webstores on behalf of the brand owner.

Deloitte, the administrators of Arcadia, reportedly aim to sell the company by the end of the month. However, Next faces tough competition from Authentic Brands Group, which has substantial financial resources. Boohoo, initially seen as a strong contender, now appears less likely to win the auction. Frasers Group, known for its preference for bargain-priced acquisitions, also has the funds to put forth a bid. However, it is unclear if Frasers will participate in the Arcadia battle, as the company has reportedly expressed interest in acquiring the Peacocks chain. Frasers has bid up to £65 million for Peacocks, while the current secured creditor, Philip Day, is seeking around £70 million. If Frasers’ bid for Peacocks falls through, Day may consider buying back the business. There is currently no news regarding Frasers’ rumored interest in acquiring Debenhams.

Overall, Next and Davidson Kempner are strong contenders in the pursuit of Arcadia. Their potential acquisition would greatly expand Next’s already diverse retail portfolio. However, the final outcome remains uncertain, as other competitors with substantial resources are also vying for control of Arcadia. Ultimately, only time will reveal which company emerges as the victor and gains control of this once-prominent British retail empire.

Useful Links:
1. BBC: Next and Davidson Kempner mull buying Topshop empire Arcadia
2. The Guardian: Next emerges as frontrunner in race to buy Arcadia brands