Fashion Shorts: City Chic Upbeat, Noni B Picks Up EziBuy

By Glenn Dyer | More Articles by Glenn Dyer

Judging by two reports from the women’s wear end of the retail sector, business is going sort of OK.

The news from Noni B and City Chic seem more particular to them rather to the sector as a whole, so investors shouldn’t be looking for similar buoyancy elsewhere

Noni B revealed yesterday it had done a deal with its major shareholder Alceon to take control of EziBuy, an online clothing, and homewares website business that has run through four owners in the past decade, at steadily declining values.

In a statement ahead of its AGM on Thursday, Noni B said it would purchase a 50.1% stake in EziBuy from Alceon for a “nominal consideration on a cash-free, debt-free basis”.

It will have an option to buy the remaining 49.9% of the Kiwi retailer by the end of 2020 for $11 million in cash.

Seeing Alceon holds a 35.9% stake in Noni B this is a related party transaction and Noni B shareholders will vote on the deal two days before Christmas.

The precise financial terms for the majority stake weren’t disclosed, but Noni B chief executive Scott Evans said they were “very attractive” for the company.

The deal would “provide a low-risk opportunity to fast-track our digital strategy,” he said in a statement. “It is complementary to our existing portfolio of brands, offering cross-selling opportunities, new category growth and geographical expansion for both businesses.”

Noni B’s brands include Noni B, Millers, W Lane, Rivers, Katies, Rockmans and Crossroads, with over 1,300 total stores across Australia and New Zealand. Some of those, such as Millers and Rivers, were bought from Specialty Fashion, now City Chic.

EziBuy has been a big disappointment. It was founded in NZ and is an Auckland-based online retailer, selling a range of men and women’s clothing, along with various homewares and beauty ranges.

It reported revenue of approximately $NZ135 million ($127 million) a year and earnings before interest, tax, depreciation and amortisation (EBITDA) of $NZ400,000 in the past financial year.

In 2013, it was bought by Woolworths for $309 million. In 2017, Woolworths sold it on to Alceon after writing its value down to just $30 million. Now it has been sold for what will amount to $11 million plus if the second option is exercised by Noni B.

Noni B says the acquisition will increase online sales to $200 million or around 20% of the retailer’s $881 million in revenue. Its 50.1% ownership will date from October 28, meaning there will be two months trading in the 2019-20 interim results.

Noni B shares fell 3.5% to $2.46 after an early jump to $2.68. The shares retreated as the wider market sold off for a second day.

Meanwhile, freed from its old Millers group of brands, online fashion retailer City Chic continues to be upbeat.

The company’s AGM was told yesterday that City Chic has made a positive start to the 2020 financial year, with CEO Phil Ryan saying the company is on track to deliver comparable sales growth in the new financial year.

City Chic, formerly known as Specialty Fashion Group, operates in the plus-size women’s clothing sector through its City Chic brand.

Mr. Ryan warned the company’s first-half results would likely hinge on the business’ performance over the next six weeks, saying the Christmas period was the most important for sales.

“Due to the high level of online sales, we are in a unique position for a retail business in that we are profitable in every month. Given the large trading months in this quarter, our earnings in the first half outweigh earnings in the second half of the financial year,” he said.

The shares eased 2.5% to $2.68.

Glenn Dyer

About Glenn Dyer

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.

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