Shake-up specialist swoops on Harris Scarfe, Best & Less
Private equity group Allegro Funds has bought Harris Scarfe and Best & Less from Greenlit Brands in the latest upheaval within Australia’s department store sector.
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HARRIS Scarfe and Best & Less have been sold to a private equity group in a major shake-up of the nation’s struggling department store sector.
Private equity group Allegro Funds, which specialises in turnarounds, has bought the businesses from household goods retailer Greenlit Brands.
The deal also hands Allegro the Australian arm of British department store import Debenhams and New Zealand plus-size women’s clothing chain Postie.
Debenhams’ single Australian store, at the upmarket St Collins Lane shopping mall in Melbourne, is in the process of shutting down.
Allegro’s deal with Greenlit covers 322 stores and 6100 employees.
The key Harris Scarfe and Best & Less businesses compete against Myer, Woolworths-owned Big W and Wesfarmers-owned Target and Kmart.
Many of those businesses have struggled over the past decade as they confront fast-fashion interlopers Zara, Uniqlo and Hennes and Mauritz, trading as H&M, along with the rise of online shopping.
They are also locked into expensive retail networks that are now bigger than they need.
Allegro managing director Fay Bou said the private equity firm was acquiring a suite of “iconic retail brands” that had a loyal customer base and passionate staff.
“We look forward to supporting a highly experienced management team to transform each of the brands,” Mr Bou said.
Brian Walker, the founder of consultancy Retail Doctor Group, said Allegro had its work cut out given the headwinds facing discount and mid-tier department stores.
“There has been a complete downturn of department stores globally,” Mr Walker told Business Daily.
“Department stores need to reinvent themselves … while some locations can be strong the overall channel is clearly having a tough time of it.”
Neither Allegro nor Greenlit disclosed a sale price.
The deal is expected to be wrapped up by early next month.
Greenlit also owns furniture and homewares chains Fantastic Furniture, Freedom, Snooze, Plush, OMF, Unitrans and FutureSleep.
Chief executive Michael Ford said the sale of its department stores, housed in its general merchandise division, would allow the company to refocus on its core household goods business. Following the transaction, Greenlit Brands would own and operate 319 retail stores with more than 3800 employees across Australia and New Zealand, Mr Ford said.
“In a sense, this transaction sees us return to our roots as a focused household goods group with a ladder of brands with demonstrable integration and, as always, striving for our ambition to achieve remarkable retail,” he said in a statement.
Mr Ford said Harris Scarfe and Best & Less were being sold to a group with a strong track record in building and enhancing businesses.
“We believe this will unlock new opportunities for all the people working within these brands,” he said.
Greenlit posted a net loss of $23.8 million in the year to September 2018 on revenue of $2.03 billion, according to its most recent financial accounts lodged with the Australian Securities and Investments Commission.
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Formerly known as Steinhoff Asia Pacific, the company changed its name to Greenlit after parent group Steinhoff International was embroiled in a global accounting scandal.
Allegro says it targets businesses that are in industries experiencing headwinds or that are carrying too much debt.
It has invested $1 billion in businesses including fast food chain Pizza Hut Australia, ice-cream, gelato and sorbet maker Everest Foods, floor coverings chain Carpet Court New Zealand and diagnostic imaging provider Perth Radiological Clinic.