Hilco and Lakeland management close in on deal for family-owned retailer 

The prolific high street investor Hilco Capital is closing in on a deal to fund a buyout of Lakeland, the family-owned homewares retailer.

Sky News has learnt that Hilco, which has backed retailers including HMV and Superdry, and Lakeland's management are in advanced talks with its shareholders about a deal to take control of the 61 year-old business. A deal could be formally agreed in the coming days, according to insiders.

If confirmed, a sale of Lakeland would follow months of talks with a number of potential buyers, including Modella Capital, the firm which recently agreed to buy WH Smith's high street chain. Lakeland is controlled by the three sons of founder Alan Rayner, and has been seeking tens of millions of pounds of new funding as it faces headwinds including the national insurance hike which came into effect this month.

Established in 1964 as Lakeland Plastics, the company employs roughly 1,000 people across a chain of nearly 60 stores, at its head office in Windermere and its distribution centres. Sky News revealed in January that the company had hired Teneo as financial advisers to help it explore options.

PricewaterhouseCoopers, the accountancy firm, has been advising HSBC, Lakeland's principal lender, which is expected to end its involvement with the company. The increase in employers' national insurance has provoked protest from retailers and hospitality businesses, with industry bodies warning that the changes represented a tipping point for many employers.

A Lakeland spokesperson said in January that it was "considering a number of options to ensure a sustainable and long-term capital structure, which builds on our sixty-year heritage as one of the UK's most innovative homeware retailers". Lakeland was founded when Mr Rayner began selling plastic bags for home freezing from his family garage in the Lake District.

It now sells more than 4,000 home and kitchen products. Accounts filed at Companies House for 2023 warned that it entered that year "facing the most challenging economic conditions for several decades with high inflation leading to falls in demand for many traditional categories".

Sales during the year were broadly flat at £153m, with Lakeland's auditors warning of a "material uncertainty…[about] the company's ability to continue as a going concern". The accounts added that it completed the renewal of its banking facilities with HSBC after the year-end, comprising a £7.5m revolving credit facility expiring in May 2028 and £10m trade finance facility.

A spokesman for Hilco declined to comment on Friday, while Lakeland has been contacted for comment..