Investors invited on board for float of Best & Less

Best & Less recorded sales revenue of $619m in the 2020 financial year.

Best & Less Group is launching a product presentation and store tour next week ahead of its plans to list on the Australian Securities Exchange.

The company has hired investment bank Macquarie Capital for the float and held investor education meetings late last year for the business that is owned by Allegro Funds Management.

The understanding is that it is hoping to sell for about $400m.

As part of the tour and presentations on Tuesday and Wednesday, investors will learn about the company’s products, supply chain and retail operations from members of its senior management, including chief executive Rod Orrock.

The product presentation at Macquarie’s offices in Sydney’s Martin Place will tell investors about its distribution centre and online fulfilment centre, explain about product sourcing and quality and offer an overview of its baby, kids and women’s products.

The bus tours will take prospective investors to its stores at Blacktown Westpoint Shopping Centre and Warringah Mall.

The Best & Less Group is made up of brands that include Best & Less and Postie in New Zealand.

Chaired by former Just Group boss Jason Murray, the discount clothing and household linens chain was purchased by Allegro Funds Management in 2019 from the local arm of Steinhoff International, Greenlit Brands.

Its annual earnings before interest, tax, depreciation and amortisation is understood to be about $55m.

The acquisition was part of a wider deal by Allegro in which it also purchased Harris Scarfe, which was later placed into receivership and sold off to the Spotlight Group.

Steinhoff almost collapsed in recent years following the discovery of accounting irregularities, resulting in a sudden fall in its share price in Germany and South Africa.

Between 2017 and 2020, online sales for Best & Less grew 50 per cent in terms of compound annual growth rate, as it invested in digital initiatives including click-and-collect.

Fund managers late last year were told that baby and children’s clothing comprised about 51 per cent of sales and the business was being pitched as a comparable to Baby Bunting.

Best & Less has recorded sales growth from $605m in the 2019 financial year to $619m in the 2020 financial year.

For the last 12 months, like-for-like sales growth was about 8.5 per cent, to $629m.

The company has cut back the number of stores in its portfolio in recent years, with 186 Best & Less stores in Australia at November and 60 Postie stores.