Greenlit Brands kicks off sales campaign for Snooze

Snooze generates about $20m of earnings before interest, tax, depreciation and amortisation.

Greenlit Brands has finally launched the sales process for its mattress company Snooze after Miles Advisory was hired to sell the business last year.

It is understood that Snooze generates about $20m of earnings before interest, tax, depreciation and amortisation.

It sells mattresses, beds, bedroom furniture and bedding and linen and may command anywhere between $100m and $200m from a buyer.

Some believe the business would fit well within a group such as Amart Furniture, owned by Quadrant Private Equity, or Greenlit’s other business, Fantastic Furniture.

However, both Amart and Fantastic Furniture have been for sale after generating strong sales during the pandemic.

While the business is a good performer, other logical buyers look less obvious, experts say.

Greenlit Brands is the Australian subsidiary of Steinhoff International, which started selling down businesses globally to reduce debts after coming close to collapse several years ago.

This came as other furniture brands, Freedom Furniture and Coco Republic, also placed themselves up for sale.

Another company that came up for sale through Goldman Sachs was Sleeping Duck.

While the pandemic created ideal conditions for homeware retailers, the thinking is that they could face some of the toughest headwinds amid rising rates.

But bricks-and-mortar traders are unlikely to feel anything like the same pressure as their online peers. After trading at $25 in 2020, taking its market value to more than $2bn, shares in Kogan.com are at about $3.43, with its market value close to $382m, while shares in online homewares retailer Temple & Webster are at $4.25 after trading at $13.70 in 2020, with its market value now at $530m.

Despite booming popularity during the pandemic, Kogan was making a loss in December and Temple and Webster made $10.7m.

In August 2020, Kogan.com’s chief and founder Ruslan Kogan and chief financial officer David Shafer sold 6.9 per cent of the stock at more than $21.60 a share, netting more than $157m.

One of Kogan’s challenges is that it is highly reliant on stock coming from China and is exposed to shipping and container delays. In the past it has taken advice from KPMG.

Analysts also believe several retailers such as Kogan.com and various fashion retailers including City Chic are wrestling with large amounts of stock that was not sold during the pandemic.

Major writedowns in the sector are likely.

Not all retailers have been facing headwinds since the pandemic. Mexican food chain Guzman y Gomez has been a strong performer, as evidenced in the sale price on Monday by Magellan Financial of its 11.6 per cent stake.

After buying 10 per cent in Guzman for $86.8m in 2020, Magellan announced the sale this week to Barrenjoey on behalf of a fund of wealthy high net worth investors for between $140m and $146m.