Noni B Bags Speciality Fashion Brands
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Asset shuffling among the rats and mice of Australian rag trade retailing yesterday with troubled women’s fashionwear group, Speciality Fashion selling a range of brands and their $600 million or more a year in sales to rival group, Noni B for just $31 million.
The handful of well known labels to be sold (including the foundation chain, Millers) lost more than $6 million for Specialty Fashion in the year to last December.
Noni B moved straight away to halt its shares to start raising $40 million via a placement and an accelerated entitlement offer to shareholders.
Specialty Fashion Group sold its stable of mid-market brands Millers, Katies, Rivers, Crossroads and Autograph to rival group Noni B. The sale will leave it with only one brand in its portfolio - City Chic, the successful plus-sized women’s apparel label.
Specialty Fashion’s chair Anne McDonald said that following a review of the business, directors unanimously agreed that retaining City Chic and selling all other businesses would maximise value for shareholders.
“In a challenging and rapidly changing retail environment, [Specialty Fashion] has been successful in building City Chic into a market leader in the attractive plus-size segment of the women’s apparel market,” Ms McDonald said in a statement yesterday to the ASX.
“The transaction will provide the funding flexibility, corporate structure and management focus required to realise City Chic’s longer term full potential”.
The brands being sold ran at a combined $6.2 million loss in the 12 months to the end of December, while City Chic was on track for underlying earnings of $19 million to $20 million this financial year.
Specialty Fashion ran at an $8 million loss in 2017.
The sale is the latest attempt to staunch the red ink at Speciality Fashion. Last year there was a brief offer from an investment group Qatar-based Al Alfia Holding. That came and went quickly and the company has struggled onwards. At one stage there was talk of a management buyout that went nowhere as well.
Now a strategic review has recommended dismembering the company and keeping just one label, City Chic and selling the remainder.
Noni B management expects further losses from the businesses in the 2018 full-year result, but expects an improvement in the following 12 months. Noni B Group chief executive Scott Evans said yesterday the businesses were underperforming “for a number of reasons".
"We believe our disciplined approach to costs of doing business, combined with our customer focus, will ensure a successful turnaround," he said. He said Noni B believes it will be able to find savings and efficiencies that will see the brands breaking even on an EBITDA basis in the 2019 full-year result.
Specialty Fashion shares rose 58% to 60 cents.
Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.
At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.