Green liked to Etam bid

Billionaire entrepreneur Philip Green was today reported to be finalising a deal to buy the loss-making UK retail business Etam.

Mr Green has been in talks with French owner Etam Developpement for some weeks as he prepares to make his first acquisition since landing the Arcadia group of companies for £850m (€1.2bn) in 2002, the Daily Telegraph said.

Reports of a swoop for the 200-store chain – thought to be for up to £10m (€14.6m) – come just three weeks after Mr Green said publicly that there was nothing “of any scale” in the retail sector that he would buy.

Those comments were based on deteriorating conditions in the sector since he failed to land Marks & Spencer with a £9.1bn (€13.2bn) proposal last summer.

Neither Mr Green nor a spokesman for Etam were available to comment on the reports today.

Mr Green owns Bhs and teenage fashion brands such as Top Shop and Dorothy Perkins and analysts expect some significant savings to be made from a deal for Etam, although some stores may close.

The wider Etam group, which has more than 2,500 outlets across 30 countries including China, Finland, Bahrain, Lebanon and New Zealand, flagged a possible sale of its UK business in January after a prolonged sales slump continued over Christmas.

Operating losses in the UK totalled €31.7m (£21.8m) in the year to December 31 following a 7.2% fall in like-for-like sales to €251.4m (£172.6m).

Etam, which also owns the Tammy brand, competes against retailers such as New Look in the market for womenswear fashion, but has struggled to hold its performance together in a deteriorating retail environment.

In a statement at the end of last month, Etam confirmed it had been carrying out a number of talks regarding its UK business and was taking a €23.5m (£16.1m) post-tax hit ahead of its likely exit.

Combined with trading losses and other charges relating to the UK, this left the group nursing an overall net loss of €61.1m (£42m) for 2004 against a €19.4m (£13.3m) profit a year earlier.

The Etam brand was founded in 1916 by German hosier Max Lindemann who decided to sell his products directly to the public. He opened the first UK outlet in the following decade.

The UK business has been dogged by losses but hopes of a trading recovery were raised when it broke even at the operating level in 2002. However, the group drifted back into red during the following year.

Seymour Pierce analyst Richard Ratner said: “It’s a sensible move, although on the face of it, given Etam’s losses, a brave one.

“However, given Philip Green’s expertise and existing economies of scale - and no doubt some modest investment – probably less high risk than it might seem.”