This article is from the Australian Property Journal archive
FASHION retailer Noni B Group will acquire 832 stores from Specialty Fashion Group, sending the latter company’s share price soaring by 57.89% yesterday to close 22 cents higher at 60 cents.
Noni B’s proposed $31 million purchase of the assets and businesses of Millers, Katies, Crossroads, Autograph and Rivers was welcome news for SFG’s investors, who were told in November last year that it would close 300 stores.
Had this deal not eventuated, SFG was looking to cull the number of stores to 700 by year 2020.
Under the deal, SFG will retail the City Chic business.
The 832 stores represent a large slice of SFG’s portfolio which comprised 1,019 stores Australia-wide. SFG’s labels are some of Australia’s oldest fashion brands including Katies, which was launched in 1954.
Noni B CEO Scott Evans said with the acquisition, the group will become one of the largest specialty women’s apparel retailers in Australia, with a network of over 1,350 stores across nine brands, including Noni B’s existing brands, Noni B, Rockmans, W.Lane and BeMe.
Founded in 1977, Noni B currently has over 640 stores nationally.
The group’s total annual sales would almost treble to around $1.0 billion following the acquisition, based on calendar year 2017 figures.
“This is another exciting step forward for Noni B Group and represents the acquisition of five well-known and established, iconic Australian brands that are both complementary and highly synergistic to our existing portfolio.
“With the successful integration of the Pretty Girl Fashion Group over the past 18 months, the team at Noni B Group has created a very successful and scalable retail business. With the acquisition of the Specialty Assets, Noni B Group will become one of the pre-eminent women’s apparel retailers in Australia, whilst retaining our solid, focussed market position,” he added.
Chairman Richard Facioni said the transaction represents another step-change in Noni B Group’s scale and will be transformational to the company.
“The shareholder value that has been created since Alceon acquired control of Noni B Group in November 2014 has been outstanding, with our share price increasing from 51 cents to $2.35 at last close. We believe this acquisition will deliver another meaningful increase in shareholder value over the next 12-24 months,” Facioni said.
The specialty assets incurred EBITDA losses of ($6.2m) for the 2017 calendar year.
Noni B management expects the 2018 full-year result for the specialty assets to show further losses, with continued deterioration in performance anticipated in the near term.
Evans said the businesses it is acquiring are underperforming for a number of reasons.
“However, we believe our disciplined approach to costs of doing business, combined with our customer focus, will ensure a successful turnaround.
“One of the key benefits of this merger is that we will be able to quickly achieve a number of savings and efficiencies that we anticipate will result in the acquired portfolio of assets breaking even on an EBITDA basis in FY2019, whilst we work to improve their overall operating performance.” Evans said.
Noni B will undertake an equity capital raising of $40.0 million, comprising an institutional placement of $24.5 million and an accelerated non-renounceable entitlement offer of $15.5 million.
Australian Property Journal
