Japanese buy Joseph for £140m

Joseph, the clothing brand which has brought luxury designs to Britain's high streets since the Seventies, has been sold to a Japanese fashion group for £140m.

Its founder, Joseph Ettedgui, and his brother, Franklin, have banked more than £25m from the sale of their stake.

Onward Kashiyama, a Japanese clothing manufacturer and brand owner, saw off competition from private equity groups and other trade buyers to complete the cash deal.

BNP Paribas has been carrying out an auction of the company since the end of last year, five years after the Ettedgui family sold 57 per cent of the business to a Belgian financier, Gerald Frere, for £98m. Mr Frere's investment business, Compagnie Nationale à Portefeuille, had bought it on a five-year investment term and wanted to cash in its stake, prompting the sale process. Other small shareholders include L Capital, an investment arm of the luxury goods group LVMH.

Onward Kashiyama already has a trading relationship with Joseph, producing its menswear range under licence in Japan. It also has a manufacturing plant in Italy where some Joseph designs are made.

The 69-year-old Mr Ettedgui, a Moroccan-born former hairdresser who began his fashion empire from a salon on Chelsea's Kings Road in the Sixties, will still have a hands-on role at the company after the sale.

He set up his first Joseph branch in 1971, also on the Kings Road, and still plays a key part in designing each season's collection. Despite selling his equity stake in the company, he will stay on with the rest of the management team to run the European side of the business. Joseph's 500 employees in the UK have had their jobs safeguarded.

Keith Watson, the finance director, said Joseph commanded such interest because it is one of the few British fashion labels with international reach.

News of the sale came as Joseph announced record results for the year to the end of March. Mr Watson said it was largely unaffected by the consumer downturn affecting the high street because of its upmarket customer base. "We are not selling T-shirts that you can buy in six other places down the road for less," he said. "We are somewhat cocooned and have had a very successful collection this year. Early signs for 2005 are good, with sales substantially ahead of last year."

Joseph's sales for the year were up 3.6 per cent on a like-for-like basis, and profits rose by more than one-third to £13.3m.