Lots of flirting, not much action

St Valentine’s Day may have slipped by but there is no shortage of retail chains looking for love just now.

The Sussan fashion group, which includes the Suzanne Grae and Sportsgirl chains, has reportedly been keen to find a suitor with deep pockets for more than 12 months. At the same time, The Reject Shop is not exactly enamoured with Allensford Group, and neither is Sigma Healthcare cuddling up to Australian Pharmaceutical Industries.

The Shaver Shop is apparently feeling a little forlorn and is keen to partner up, rumour would have it, with Hairhouse Warehouse. Then there is speculation that Myer may not be rebuffed another time if it was to offer a new proposal to David Jones.

Although they are not talking about it, there are rumours around that Naomi Milgrom’s Sussan fashion chains have sought advice from investment bankers on how to woo a buyer after Citigroup was unable to find a purchaser.

The chains are estimated to be worth between $300 million and $400 million. The pricing seems high – notwithstanding the brand credibility – given annual sales of less than $500 million.

The Reject Shop feels devalued

The Reject Shop has spurned overtures from Allensford Group, controlled by the Germinder family, which is trying to win over the publicly listed discount retail chain with a $78 million takeover offer.

The Reject Shop believes it is worth more than the suitor’s offer, despite a 1 per cent fall in sales to $433 million and a 40 per cent tumble in net earnings to $10.6 million for the first half of the 2019 financial year.

It believes it has developed a strategy to drive sales and boost future earnings by developing the greeting card and home storage categories. Rejecting its suitor, The Reject Shop says Allensford’s unsolicited offer is “inadequate and highly opportunistic”, and fails to take into account its plans for growth.

Sigma Healthcare has developed a standalone strategy, but it has not dismissed overtures from Australian Pharmaceutical Industries, which has a 12.9 per cent shareholding and a marriage proposal on the table. The two publicly listed pharmacy wholesalers are undertaking a reciprocal “high-level due diligence” process to establish compatibility, but Sigma Healthcare could well attract other suitors.

The Shaver Shop is a newbie in the dating game, but it makes sense for the retailer to find a way to bulk up its business as its listing on the Australian Stock Exchange is problematic on its current operational scale. The Shaver Shop has, perhaps, not been jilted by Hairhouse but has not been encouraged either.

Regarding David Jones, industry gossip theorises that the South African Woolworths company may be losing enthusiasm for the department store after half-year earnings dropped by 29 per cent – and the first eight weeks of the second half  has seen a 3 per cent fall in revenues.

There is a view that the thwarted merger of David Jones and Myer could create a sustainable department store business, but neither of the two retailers would be putting any proposal from a position of strength and little is likely to occur ahead of Myer’s half-year results announcement on March 6.

Just one happy ending

That all means the only happy ending in St Valentine’s month of February is the acceptance by the apparel wholesaler and retailer Gazal of a proposal by PVH Corp to acquire the Australian company’s interests in their joint venture, PVH Brands Australia.

PVH Corp is listed on the New York Stock Exchange.

The joint venture’s brand portfolio included Calvin Klein, Van Heusen, Pierre Cardin, Bracks, Nancy Ganz and Tommy Hilfiger.  It generated sales of around $270 million for the 12 months to July 2018.


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