Otto UK is conducting a wide-ranging strategic review of its UK operation, which could result in its German parent selling off the UK home shopping group.

Otto Group, which owns the Freemans and Grattan catalogue brands in the UK, has drafted in accountancy firm KPMG for the review, which began before Christmas and could last for six months.

Otto UK has told staff that the final outcome of the review could lead to a sale of the group or it embarking on the acquisition of other home shopping businesses.

Otto UK chief executive Mike Hancox insisted that now is the right time to consider its strategic options, because the business is trading well, having turned around its performance.

He said: “This shows we have options. It is a good thing to be in this position, we were not in a position to do this two years ago.”

Another option is that Otto UK may seek to acquire a bricks-and-mortar retailer that does not have a multichannel operation (Retail Week, December 21), in an effort to generate synergies from a more diverse portfolio.

Otto UK also owns homewares and fashion home shopping business Kaleidoscope and young fashion brand Oli. The group spent£25 million launching Oli’s catalogue and web site last July and sales rocketed, averaging£1 million for the first three months.

Hancox insisted that there were no plans to sell the successful distribution arm of the company, Parcelnet. “It is the golden nugget of our business,” said Hancox. “It is one part of the business we are most excited about and is growing 20 per cent year on year.”

Parcelnet delivers for Otto’s UK brands and also runs fulfilment for retailers including Next, Boden and Lakeland.

In the year to February 28 2007, Otto’s sales were 15.25 billion (£11.33 billion).

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