Coats puts Jaeger and Viyella up for sale to focus on threads

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The Independent Online

Coats, the textiles group, has finally put its struggling Jaeger and Viyella clothing chains up for sale as part of a previously announced plan to concentrate on its core threads business.

Coats, the textiles group, has finally put its struggling Jaeger and Viyella clothing chains up for sale as part of a previously announced plan to concentrate on its core threads business.

The decision comes after a disastrous attempt to reposition the Jaeger brand as young and trendy. Its spring and summer ranges deterred its more mature customers while failing to attract sufficient younger buyers.

The result was an £8.3m loss in the fashion division for the first six months of the year as the company was forced to discount unsold stock.

"We went too far, too fast in terms of making the range more fashionable, more attractive to a younger consumer, and I think we alienated the traditional, older Jaeger customer," Martin Flower, the chief executive, said.

Mr Flower said this problem had been corrected for the brand's autumn and winter ranges.

HSBC has been appointed to handle the sale of the two chains but the company admitted they may not realise their £50m book value. The disposals are expected within a few months.

"The recovery of Jaeger, which has not performed particularly well for many years now, is going to take longer, and I think Jaeger is more likely to realise its potential in the hands of a retail business than a threads business," Mr Flower added.

The Transport and General Workers' Union said it was seeking an urgent meeting with Coats to get assurances about future job security.

"Thousands of UK workers will be affected by these sales if they go through.... We've been here before with Coats as they did try to sell last year but shelved those plans," the union said.

The group is also opening talks with potential buyers for its bedwear business, which has a new book value of about £20m.

The sales were announced as Coats reported pre-tax profits of £4.7m for the six months to 30 June, down from £5m in the same period last year.

The company said it anticipated modest progress over the full year. "As long as there is no worsening in economic conditions over the next few months, we do anticipate a significant improvement in threads compared with the second half of last year," the company added.

The company said it plans to build new plants in Mexico and Romania to boost its competitive position in both North America and Europe. Capacity in Western Europe and the US will be reduced.

The shares fell a penny to 54.75p yesterday.

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