Universal Store added to Brett Blundy’s IPO offerings

Brett Blundy is seen as having the magic touch when it comes to creating highly profitable and sought-after brands. Picture: James Croucher

Billionaire businessman Brett Blundy is set to add another retailer to the list of companies he has taken to the public market, with Universal Store priced at $3.80 a share for its initial public offering, putting its market value at $278.1m.

The youth fashion retailer specialises in trend-led and casual men’s and women’s fashion, shoes, accessories, lifestyle and gifting and sells a range of brands including Champion, Perfect Stranger, Tommy Jeans, Wrangler and Lee.

Universal Store has bucked the trend of other struggling apparel groups by reporting double-digit sales growth for the past five years.

As a result, it has been rewarded by investors, who have agreed to help the business with its $147.8m IPO.

The IPO price equates to 14 times the company’s earnings.

Mr Blundy is seen as having the magic touch when it comes to creating highly profitable and sought-after brands, previously listing groups such as jewellery chain Lovisa, Adairs and retail property group Aventus.

His company also sold its retail label Bras and Things in 2018 for $500m to Hanes Australia.

Universal Store was snapped up by Mr Blundy’s BB Retail Capital, CDCM and Five V Capital in June 2018.

The consortium outlaid $110m for the operation from founders Michael and Greg Josephson.

For the 2020 financial year, Universal Store generated about $30m of annual earnings before interest, tax, depreciation and amortisation

Once Universal Store is listed, BB Retail Capital will reduce its stake to 16.39 per cent, from 38.03 per cent, Five V Capital will reduce its interest to 6.38 per cent, from 14.81 per cent, Mountainview Trust to 6.15 per cent, from 14.26 per cent, and Catalyst Direct Capital Management will cut back its stake to 2.15 per cent, from 3.57 per cent.

The 65-store company used JPMorgan, UBS and Morgans as advisers for its IPO and will start trading on a deferred settlement basis on November 16 after its prospectus is lodged on October 28. Chairing the business will be the well regarded Peter Birtles, who previously ran Super Retail Group.

While online businesses remain popular with investors, Universal Store generates 86 per cent of its sales in store and the company’s earnings are expected to be higher next year when COVID-19 disruptions are likely to have less of an impact on trading.

Evidence of the strong sentiment towards online retailers was seen this month when Quadrant Private Equity’s Adore Beauty was priced as a business worth $635.3m, equating to 3.9 times its annual revenue.

Online retailer Temple and Webster has been trading at record highs, but its shares fell 17.5 per cent on Wednesday, from $14 to $11.57, taking its market value to $1.68bn. At the start of the year, its shares were only worth just over $2.50.

The share price decline came despite the company saying in its market update that its revenue growth was 100 per cent.

However, the revenue growth of other online competitors has been at about 130-150 per cent, which some take as an indication that the group is losing market share.

Elsewhere, online trade services platform hipages has lodged its prospectus for its IPO, handled by Goldman Sachs.

The company is raising $100.4m and will sell shares at $2.45 each, which was at the top of its share price range.

Once listed, its market value will be $318.5m.

Hipages will start trading on November 12.