Next is in advanced talks to buy Cath Kidston in its latest swoop on a prominent but troubled retail brand.

Sky News has learnt that the FTSE-100 chain, which has a market value of close to £8.7bn, could wrap up a deal to acquire the modern vintage label as soon as Tuesday.

Banking sources said an agreement was likely but not certain.

Cath Kidston has been owned by Hilco Capital, the specialist retail investor, for less than a year.

Next’s prospective swoop on it marks a further attempt to build a portfolio of wholly owned retail labels.

Its acquisition strategy has focused on well-known names which have run into financial difficulties and which can benefit from Next’s logistics and marketing muscle.

Among the brands it has bought are Made, the online furniture retailer, and Joules, the fashion group which collapsed into administration late last year.

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It also bid for TopShop, the then jewel in the crown of Sir Philip Green’s high street empire, but pulled out of an auction before the brand was sold to ASOS.

Next is due to report full-year results on Wednesday and is forecast by City analysts to unveil record pre-tax profits of more than £850m.

PricewaterhouseCoopers has been advising Hilco on a sale of Cath Kidston for several weeks, and is understood to have held talks with a number of potential bidders.

Cath Kidston was bought out of administration little more than two years ago by Baring Private Equity Asia (BPEA).

At one stage, it had scores of shops, but now trades from fewer than a handful of its own outlets, having collapsed into administration in 2020 with the loss of nearly 1,000 jobs.

It was established by its eponymous founder in 1993, and became a high street fixture with scores of standalone shops.

Like many retailers, however, its fortunes were hit by the pandemic, forcing it into insolvency about three years ago.

BPEA, which took full control of Cath Kidston in 2016, struck a pre-pack insolvency deal which entailed the closure of its UK high street estate.

It still has fewer than a handful of stores in Saudi Arabia.

Known for its floral and polka dot designs, Cath Kidston has been run for several years by Melinda Paraie, who joined as chief executive from luxury goods brand Coach in 2018.

It expanded from a single shop in west London selling car boot finds and vintage fabric into a business offering fashion, homewares and accessories.

The chain made a fortune for its founder when she sold a stake to private equity firm TA Associates about 12 years ago in a deal reportedly worth £100m.

Next and Hilco declined to comment.

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