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Naked Brand Group manufactures intimate apparel and swimwear.

Published: January 30, 2021
Author: Ssmundra2612

Naked Brand Group Limited, which manufactures intimate apparel and swimwear recently announced its plans to undertake a transformative restructuring in which it will shed its brick-and-mortar operations to focus exclusively on the planned rapid acceleration of its e-commerce business. The company’s brands include Bendon, Frederick’s of Hollywood, Fayreform, Pleasure State, Lovable, Naked, Hickory, Bendon Man, Davenport.

Naked will seek to leverage its brand, platform and build out proprietary technology to meet the needs of consumers in the digital world, a company press release said.

“Consumer trends are rapidly evolving away from brick and mortar towards online shopping, with e-commerce expected to represent 22 per cent of global retail sales by 2023 or $6.5 trillion, according to eMarketer,” said Justin Davis-Rice, chairman of Naked.

“We have experienced success with our e-commerce business and are prepared to rapidly expand our existing digital footprint as we pursue the development of a single, world-class technology platform serving the intimate apparel industry and seek to become the conduit for consolidation,” he said.

In conjunction with the strategic restructuring, Naked has signed a non-binding and non-exclusive term sheet to divest itself of its Bendon subsidiary, allowing Naked to focus on its profitable e-commerce business. The divestment of the Bendon subsidiary would be accomplished through its sale to a group composed of existing management of Naked, including Davis-Rice.

“In the current environment, our capital-intensive brick-and-mortar legacy business has proven challenging to sustain. This divesture will allow us to remove all group debt and transition to a pure-play, technology-rich e-commerce platform focused on intimate apparel with our existing digital business, FOH Online. FOH Online currently generates annualized revenue of approximately $20 million in the USA,” Davis-Rice added.

Under the proposed terms of the divestment, the management group would assume the existing liabilities of Bendon of approximately NZ$32.5 million, after repayment by Naked of Bendon’s senior secured credit facility, with a cash adjustment to the purchase price based on a target inventory amount.

In addition, Naked would have the right to receive future payments based on Bendon’s net profits, and upon any subsequent sale of Bendon, during specified periods following the closing. Naked would provide subordinated debt financing to Bendon and Bendon would provide management services to Naked under a management services agreement.

Naked intends to enter into a definitive agreement for the sale in February this year to seek shareholder approval for the transaction in March 2021 and to close in April 2021

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