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Noni B Acquisition to Grow Annual Sales to $1 Billion

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By Published On: May 14, 20180 Comments

Noni B has made a deal with Specialty Fashion Group to acquire the assets and businesses of five of Specialty’s most recognisable brands; Millers, Katies, Crossroads, Autograph and Rivers.

In a cash deal of $31 million, Noni B Group and Specialty Fashion Group have made a deal that will see Noni B take over five of Specialty’s key brands, excluding the City Chic plus-size fashion store.

With these assets, Noni B will grow to 1,350 stores from across nine brands, including its existing retail offerings; Noni B, Rockmans, W.Lane and BeMe. The group believes that the acquisition will also increase its annual sales to roughly $1 billion, almost triple its sales from the 2017 calendar year.

“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, Scott Evans, the managing director and CEO of Noni B Group said.

“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, focused market position.”

Evans believes Noni B Group will be able to use the extra revenue generated through this acquisition to further develop the customer experience, in-store and online offerings of each of its brands. He is also confident that the purchase will create value for shareholders, as he expects share prices to rise over the next 12-24 months, much like they did in 2014 when Alceon acquired a controlling interest in Noni B.

As the second major acquisition for Noni B in just two years, after the fashion group purchased Pretty Girl Fashion back in 2016, Evans’ public statements on the purchase have been positive, despite heavy losses over the past year. In the 12-months finishing December 2017, the five newly acquired brands generated an EBITDA loss of $6.2 million.

These losses have been taken into consideration, with Noni B expecting the Specialty assets to show losses in the 2018 full-year results, with further losses expected in the short-term.

“The businesses we’re 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,” Evans said.

According to Evans, the group expects to generate merger benefits through efficiencies in cost of doing business of approximately $30 million, which management is confident will be achieved by the end of the 2019 financial year.

“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,” he said.

Noni B Group’s purchase of five of Specialty’s key brands will be funded by an equity capital raising of $40 million, including Institutional Placement of $24.5 million and an Accelerated Non-Renounceable Entitlement Offer of $15.5 million. These funds will also help fund transaction and restructuring costs, providing working capital for the five new brands.

The deal between Specialty Fashion Group and Noni B Group is expected to finalise by early July.

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