Moss Bros to sell Hugo Boss stores
Shares in High Street menswear retailer Moss Bros surged more than 14% after the company announced its was selling its 15 Hugo Boss stores.
Moss Bros will sell the stores back to Hugo Boss for £16.5m, ending a 16-year franchise deal.
Brian Brick, Moss Bros chief executive, called the deal "transformational".
The group, which has 155 stores in the UK, said in a statement that trading held up well during the Christmas period despite the bad weather.
Like-for-like sales rose 7% in the 26 weeks to 29 January - a slight slowdown on the 8.3% reported in early December.
Moss Bros said it wants to use the Hugo Boss money to revamp core stores and finance new initiatives, such as the roll out of its Moss Bespoke tailoring service.
Moss Bros, formed in 1851 and which also trades as Savoy Taylors Guild and Cecil Gee, has operated Hugo Boss stores under franchise since 1995.
"This is a transformational deal for Moss Bros and absolutely in line with our recently developed strategy of focusing on growing our own brands," said Mr Brick.
"It [the sale] makes the business much more simple for us to develop, and in today's world, having that amount of cash on your balance sheet is pretty handy," he added.
Moss Bros shares rose 14.7% to 27.25p in morning trading.
Andrew Wade, analyst at Numis, said the sale was a good move.
"We believe management is continuing to make the right moves strategically and operationally," he said.
After the sale completes on 1 April, Hugo Boss will directly control 35 outlets. The acquisition includes the flagship Regent Street store in central London.