Appointment of investment bank sparks speculation of clothing brand sale
The announcement that US brand management company Cherokee, which owns the licence for Tesco's Cherokee clothing brand, has hired investment bank UBS to advise on a strategic review has sparked speculation that the grocer could take control of the licence.

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.'

Topics