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Noni B set to become Australia’s biggest womenswear group with four-brand buy

Australia’s Noni B Group is set to become Australia’s biggest womenswear retailer with A$1bn sales, buying local peer Specialty Fashion Group’s Katies, Millers, Crossroads, Autograph and Rivers brands for A$31m.

Noni B, which owns its signature chain plus Rockmans, W Lane and BeMe brands, said the collective buy will boost its retail portfolio from 645 units to more than 1,350 stores across nine banners, exceeding clothing sales and stores at Solomon Lew’s Premier Investments.

The deal will boost Noni B’s sales from A$311m to break through that A$1bn barrier.

Sources told the Australian Financial Review that Noni B would seek to raise A$40m from investors to fund the acquisition via a A$25m institutional placement and a A$15m accelerated non-renounceable rights issue, underwritten by stockbroker Wilsons.

The sale comes after a potential takeover of Specialty by an investment company controlled by the Qatari royal family failed in 2017. That meant losses grew in fiscal 2016/17 to A$8.4m.

The group blamed aggressive discounting in the sector for an ongoing sales slump for Millers, Crossroads and Katies.

The five Specialty assets incurred earnings losses of A$6.2m on sales of A$642m in calendar 2017 and Noni B management expects further losses from the businesses in the 2018 full-year result.

Noni B Group chief executive Scott Evans told AAP that 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 added that Noni B expects it will be able to find savings and efficiencies that will result in the acquired portfolio of brands breaking even on an earnings basis in the 2019 full-year result.

Meanwhile, Specialty will remain listed on the Australian stock market and will retain its plus-size womenswear business City Chic.

Specialty chair Anne McDonald said the directors unanimously agreed that retaining City Chic, the group’s growth business, and selling the other brands “was the best plan”.

City Chic is expected to earn about A$20m (ebitda) this year on sales of about A$140m, with 37% of sales online, from 110 stores in Australia and New Zealand and a rapidly growing ‘drop-ship’ and online business in North America and Europe.

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