Tesco's use of the Cherokee brand has made it the fastest growing clothing business in the UK. In October, the retailer announced its plans to extend both the Cherokee and Florence & Fred clothing ranges to its overseas stores, starting with Thailand this autumn.
If the retailer did acquire the brand, the strategy would be in line with Marks & Spencer's acquisition of the Per Una brand last year, and Asda's acquisition of George from George Davies, who left for Marks & Spencer in 2000. The George brand now accounts for about£1bn of Asda's annual sales.
Iain McDonald analyst Numis said: 'I'm sure Tesco would love to own the brand. Anything that can internalise margin would be a good idea. Cherokee's success in the UK is completely dependent on Tesco, so it wouldn't need to overpay.'
Cherokee chief executive Robert Margolis said: 'Our board believes that this is an opportune time for us to explore alternatives for enhancing stockholder value and building upon our accomplishments.'
A Tesco spokesman said the retailer would not comment on the appointment of UBS by Cherokee. He said: 'Our contractual relationship remains. We have no plans to change it at present.'