City Chic Collective expands into UK, buying British retailer Evans

Evans is part of Phillip Green’s collapsed Arcadia Group in Britain and gives City Chic a foothold in Europe.

Evans is part of Phillip Green’s collapsed Arcadia Group in Britain and gives City Chic a foothold in Europe.

Plus-sized women’s fashion chain City Chic Collective is cementing its position as a leading brand owner in the $50bn global “curves” fashion industry with the purchase out of administration of British retailer Evans to match its existing strong presence in Australia and the US.

City Chic, which in September lost out in a bidding war for the US e-commerce assets of fashion brand Catherines, has acquired the leading clothing brand Evans from Phillip Green’s collapsed Arcadia Group in Britain for £23.1m ($41m), giving it a foothold in Europe to match its recent expansion in the US and growing brand power in Australia.

Arcadia also owned well-known brands such as Topshop and failed last month putting more than 13,000 jobs at risk in Britain.

The UK plus-sized women’s fashion chain has a history of 90 years as a high street retailer in Britain with City Chic picking up Evans e-commerce and wholesale businesses (excluding store portfolio), which generated £26m of sales.

City Chic said Evans had a loyal customer following, with 19 million annual website visits. It said it would give it a platform to launch into a new market, with an estimated worth of £5bn-plus annually.

Shares in City Chic rallied more than 13 per cent on the deal and later closed up 11 per cent at $3.52.

Chief executive Phil Ryan said he had followed the Evans business for over a decade and seen how within Arcadia’s portfolio the brand had evolved from a dominant high street retailer into a more digitally focused business.

“We have always been looking in the UK, we actually have had product on the Evans website for a long time and really we see UK and Europe as the third leg, or the third big region for us globally, as we try to lead in curves,” Mr Ryan told The Australian.

“Evans gives us an excellent foundation in a new geography to grow our collective and is a brand which aligns with our existing product streams.

“The acquisition meets our strategic objective of growing through global customer acquisition, digitally, and in the $50bn curvy apparel market. We are confident we can deploy our lean, customer-centric operating model to drive revenue growth and cost efficiencies in the existing business. “

City Chic will pay for the deal from cash reserves after it raised more than $110m through a share placement and retail offer priced at $3.05 a share that was slated for the purchase of the Catherines business in the US. Although it was the designated frontrunner to gain control of Catherines it was subsequently outbid and walked away from the deal.

City Chic’s pre-acquisition cash balance as at November 30 was $121m.

“I think this (Evans) is a great deal for us, the timing of the administration happened with Arcadia and this is strategically what we have been looking at for a long time. We know that with the increase in our UK business the returns for our shareholders will be very strong based on the deal.”

Mr Ryan wasn’t overly worried about the severe COVID outbreak in Britain and the extensive shutdowns with City Chic making the investment in Evans for the long term.

“This is not about the next month or two months, it is about the ability to communicate to the UK market and Evans is the best known brand for a UK plus-sized lady, so for us we are looking at this as to how we can create long term value and importantly our products to deliver them to more customers.”

City Chic will acquire the Evans brand and intellectual property, customer base and inventory, which represents the key assets of the e-commerce and wholesale businesses. It will also receive the benefit of a transitional services arrangement in connection with the Evans e-commerce business until April 2021. The transaction excludes the Evans bricks and mortar store network of over 100 locations.

The administrators are entitled to trade from the existing Evans stores until the end of March 2021, in order to liquidate existing stock in the stores.