Noni B (ASX: NBL) announced an acquisition and market update at its annual general meeting (AGM) yesterday.
Noni B is a fashion retailer that operates a number of brands including Rockmans, beme and W.Lane. It recently acquired a number of other retail chains from Specialty Fashion Group like Rivers, Millers, Katies, Crossroads and Autograph.
Noni B Trading Update
Management said that they are pleased with its performance to date. The company has been focused on maintaining a good margin rather than sales at any price, which is why EBITDA (click here to learn what EBITDA means) has been in line with expectations.
For the first four months of FY20 its EBITDA has risen by $9 million.
The company also said that the newly acquired brands have achieved comparable store sales growth and profit margin improvement. Noni B said this is even more encouraging given the difficult retail trading environment.
However, the original business is not doing as well. Group comparable store sales were down 4% to the end of the October and the comparable store margin was down 2%.
Noni B said at this stage, subject to Christmas and Mother’s Day sales, the company is comfortable with consensus estimates of $75 million for EBITDA for FY20.
Noni B Acquisition
The company also announced an acquisition to accelerate the company’s digital strategy.
It’s acquiring a 50.1% stake of EziBuy from Alceon for a cash consideration of $11 million.
The idea of the acquisition is that it will increase online sales to approximately $200 million, which would represent around 20% of total group revenue. It provides Noni B with access to a database of over 2 million customers, with a significant proportion in New Zealand.
In FY19 EziBuy generated normalised EBITDA (excluding non-recurring costs) of NZ$0.4 million.
Management anticipates cost of doing business synergies of approximately $9 million to be fully realised in FY21, with “additional upside anticipated from leveraging Noni B’s sourcing scale and capabilities.”
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At the time of publishing, Jaz does not have a financial interest in any of the companies mentioned.