Noni B buys 50% stake in EziBuy

New Zealand online retailer EziBuy is set to have its third owner in three years.

Alceon is selling EziBuy to stablemate Noni B. Picture: Supplied

New Zealand online retailer EziBuy will have its third owner in three years after fashion chain owner Noni B inked a deal to buy a 50.1 per cent stake in the group from private equity group Alceon Group, with an option to gain full control by December 2020 for $11 million.

The news came as shareholders were told at Noni B’s AGM on Thursday morning that pre-tax earnings for the first four months of fiscal 2020 were up $9m as the retailer focussed on margin rather than sales at any price. However, this focus has seen sales slip. Like for like sales were down 4 per cent to the end of October, comparable store margin is down 2 per cent.

The AGM was told this morning that Noni B remained comfortable with market consensus of $75m in EBITDA for 2020.

The purchase of the initial 50.1 per cent stake was made for a “nominal value” Noni B announced on Thursday. That could mean the stake was bought for as little as $1, with EziBuy’s value shrinking considerably from the $350 million Woolworths paid for it in 2013.

Woolworths later sold EziBuy for an undisclosed sum to Alceon, which is now passing it on to Noni B. Alceon didn't have far to look for a buyer for EziBuy, with the private equity firm launching a takeover of Noni B in 2014 and eventually gaining a 36 per cent stake the company.

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Noni B chairman Richard Facioni is an executive director of Alceon Group, where he leads its corporate advisory practice.

Noni B chief executive Scott Evans said: “This will be another exciting step forward for the group, consolidating our position as one of Australia’s leading apparel retailers. It will provide a low-risk opportunity to fast-track our digital strategy, increasing our digital income to around 20 per cent of the combined group’s revenue.”

He said the terms of the transaction were very attractive for Noni B and that he was confident it would be highly value-accretive.

“We have a successful record of acquiring retail businesses and improving their operational performance. It is complementary to our existing portfolio of brands, offering cross-selling opportunities, new category growth and geographical expansion for both businesses,” Mr Evans said.

“EziBuy is one of the largest multichannel retailers in Australia and New Zealand, generating approximately $NZ135m in revenue, of which over 80 per cent is through its digital platform. It houses expertise in digital and catalogue retailing which we can leverage in a meaningful way across our broader portfolio.”

EziBuy delivered normalised EBITDA (excluding non-recurring costs) of $NZ400,000 for fiscal 2019. Noni B expects cost of doing business synergies of around $9 million to be fully realised by 2021.

An independent subcommittee of the Noni B board considered and approved the deal. Alceon-nominated directors on the Noni B board, Richard Facioni and David Wilshire, did not participate in the consideration of the deal on behalf of Noni B.

Noni B will seek shareholder approval for the deal at an EGM slated for December 23.