UAE’s Brands For Less to sell 35% stake to US-based TJX Companies for $360m

The transaction values the off-price retailer at $1.2bn

The deal values Brands for Less, which specialises in fashion, homeware and toys, at $1.2 billion. Photo: BFL Group

Brands For Less Group has agreed to sell a 35 per cent stake in its off-price retail business to US-based The TJX Companies, a global value seller of clothing and home fashions, for $360 million.

The deal values Brands for Less, which specialises in fashion, homeware and toys, at $1.2 billion, the UAE company said in a statement on Wednesday. Brands For Less serves more than seven markets across the Middle East and South-east Asia.

The deal positions it to leverage Massachusetts-based TJX's extensive international experience and market presence.

“This is an exciting opportunity for growth, and with TJX’s international expertise, we are well placed to successfully execute our strategy while supporting the development and rewarding the dedication of our employees,” Toufic Kreidieh, executive chairman and co-founder of BFL Group, said.

White and Case provided legal counsel to Brands For Less on the transaction while deNovo Partners acted as the sole financial adviser. The transaction is expected to close later this fiscal year.

Off-price retail is a business model where retailers sell branded and designer items at prices significantly lower than those in traditional stores and online marketplaces. These goods typically consist of surplus inventory, clearance items or production overruns sourced from many retailers and manufacturers.

The business is booming globally owing to consumers' increasing preference for discounted branded merchandise.

The off-price retail market is expected to reach $342.62 billion this year, with projections to jump to nearly $606.49 billion by 2031, a compound annual growth rate of about 8.5 per cent during that period, according to a report compiled by Coherent Market Insights.

The market is driven by income inequality in developed economies and consumers’ changing preferences towards discounted designer clothes and accessories, the report said.

Mr Kreidieh opened the first Brands For Less store with childhood friend and managing partner Yasser Beydoun in Lebanon in 1996. They established the group's headquarters in the UAE in 2000 and now have more than 100 stores. It sells designer brands at up to 80 per cent off the original retail price.

The group has also acquired exclusive rights to the Tchibo franchise in the Middle East and North Africa, selling the German brand’s homeware and clothing at competitive prices in the region.

TJX has operations across the US, Canada, Europe and Australia, running more than 4,900 stores in nine countries.

Following the announcement, its stock jumped 6.11 per cent to trade at $120.23 a share at market close on Wednesday.

The company said this deal gives it an “opportunity to invest in an established, off-price retailer with significant growth potential”.

“We are excited about our potential to capture additional market share in all of our geographies and to continue our global growth, while delivering great value to more consumers around the world and driving the profitability of TJX,” said Ernie Herrman, chief executive and president of TJX.

The company’s net sales for the second quarter jumped almost 6 per cent on an annual basis to nearly $13.5 billion, TJX announced on Wednesday. Its total inventories stood at $6.5 billion as of August 3.