Coco Republic mulls sale with advisers on board

The retailer has 81 stores nationally and generated 29 per cent of its sales during the 2020 financial year from online.

Upmarket furniture company Coco Republic is believed to be on the market, with advisory firm Allier Capital said to be working on a plan to find a buyer for the business.

Coco Republic sells upmarket furniture, homewares, lighting, rugs art and outdoor furniture and storage products and also offers interior design services.

The potential divestment plans come after a year of surging sales in the furniture industry as consumers opted to spend money on their homes at a time travel has been restricted due to the global pandemic.

According to the company’s accounts, shareholders include Paul, Dale and Anthony Spon-Smith and Jeremy Byrne.

For the year to June, the business generated $4m in profit before tax and adjustments before the adoption of the new accounting standards compared to $5.23m in the previous corresponding year.

Annual sales increased 13.5 per cent and profit after tax was $2m.

The business also owns and co-operates three hospitality venues under L’Americano Espresso Bar.

Coco Republic, run by Nicholas Foster, entered the US market in 2019 through Californian retailer HD Buttercup.

The company’s founder and chairman is Paul Spon-Smith, while Anthony Spon-Smith, a co-owner, is the executive director along with Jeremy Byrne.

It has eight showrooms in Australia and New Zealand, located in Melbourne, Brisbane, the Gold Coast and Auckland.

In the 2019 financial year, Coco Republic recorded $96m of sales, up 17 per cent for the previous year.

It comes after Steinhoff International subsidiary Greenlit Brands, made efforts to float industry rival Fantastic Furniture late last year.

However, the company pressed pause on the float and is hoping for conditions to improve this year.

The hope was for Fantastic Furniture to list through Macquarie Capital and Credit Suisse with a market value of between $430m and $530m, equating to 11 times its annual net profit.

Sources say that fund managers were not prepared to meet its price expectations, preparing to pay about 9 times or ten times, with concerns about future earnings growth momentum.

The discount furniture retailer is forecast to generate $650.7m of sales for the 2021 financial year, up from $550.7m in the 2020 financial year to June.

Earnings before interest, tax, depreciation and amortisation is expected to be $76.7m, up from $61.7m in the 2020 financial year to June.

Net profit for fiscal 2021 is expected to be $47.6m, up from $38.5m for the 2020 financial year.

The retailer has 81 stores nationally and generated 29 per cent of its sales during the 2020 financial year from online, when shoppers stayed home since March due to the Covid-19 pandemic.