Queenspark and Events brands bolster Noni B

THE new chief of Noni B says the group’s acquisition of two fashion brands will help in reducing supply chain costs.

THE new chief executive of embattled fashion retail chain Noni B says the group’s acquisition of two fashion brands will help in reducing supply chain costs and will “complement rather than detract’’ from its core ­offering to customers.

After a protracted due diligence process, Noni B is acquiring the Queenspark and Events brands from an entity called BD Standard, previously known as URB, for $675,000.

The brands span a network of 44 stores in Australia, principally in NSW and Queensland, and have an online presence through two retail websites, www.queenspark.com.au and www.events­retail.com.au. They were formerly part of Specialty Fashion’s stable.

The acquisition will be funded from existing cash resources and Noni B will operate the online business under the two brands.

Noni B says it will also license the brands to a subsidiary of BD to enable it to continue to operate its retail stores.

In his first media interview since taking on the role six weeks ago, Noni B chief executive Scott Evans — the former CEO of lingerie retailer Bras N Things — said the brands of URB “sat nicely with and complemented’’ the group.

“Queenspark is a nice sister brand with slightly different handwriting to what Noni B has. But it plays in that same space, which means there are efficiencies you can get being in the same areas with the same suppliers. They are good-quality brands, not discount brands. They complement rather than detract,” he told The Australian.

Mr Evans has flagged boosting sales and profits by opening new stores in regional areas, tweaking Noni B’s product range, boosting online sales and cutting supply chain and procurement costs.

Noni B is now controlled by investment group Alceon, backed by former Babcock & Brown and JPMorgan banker Trevor Loewensohn and Babcock founder Phil Green.

Alceon emerged as the only bidder for Noni B after a lengthy sale process run by TC Corporate on behalf of the retailer’s long-standing owners, the Kindl family, which sold its stake into the Alceon bid.

But Alceon’s attempts to delist Noni B from the ASX were frustrated by Gannet Capital, an investment fund associated with the Smorgon family.

Gannet took a stake of about 12 per cent of Noni B and refused to accept the Alceon offer, claiming it was looking forward to reaping the rewards of the turnaround strategy being implemented by the new management team. It retains that interest.

Gannett chief executive Glenn Poswell had previously expressed concerns about Noni B acquiring URB, a loss-making company that owned the Events and Queens­park brands.

For the financial year ended 30 June 2014, URB had total sales of $30 million. It has been renamed BD Standard following Alceon’s acquisition of Noni B.

The purchase price for the URB acquisition would have been $1.7m, plus a further equity injection of $2.3m that was required to recapitalise URB’s balance sheet.

However Noni B said the final transaction announced this week, where the retailer is simply acquiring the brands and licensing them to BD Standard, now reflects a more favourable price and lower risk in comparison to the original URB transaction flagged in September.

Mr Poswell was also concerned about the transaction distracting Noni B management from the core business, which he described as “the jewel in the crown”.

Speaking before the final deal was unveiled, Mr Evans acknowledged Gannett’s concerns “were valid”, before noting: “If anything happens with URB it will be done on a basis that doesn’t distract from Noni B at all. There will be no management distraction. We can’t afford to do that.”

Alceon executive director Richard Facioni said his firm was also concerned about management being distracted by the URB transaction.