Fantastic Furniture float plan revived

Retail chain owner Greenlit Brands has breathed new life into stalled plans to float Fantastic Furniture, as profits rebound.

Greenlit has revived plans for a Fantastic Furniture float.

Greenlit Brands, the owner of a stable of furniture retail brands, is eyeing off a sharemarket float this year for its Fantastic Furniture chain.

It came as the group, which also owns Freedom and Snooze, bounced back to a small profit of $13.585 million following a massive restructure and divestment of some of its businesses.

Greenlit, the second largest furniture retailer in Australia after Ikea, could list Fantastic Furniture on the ASX in 2021 after postponing a float planned for last year, but which was ultimately sidelined by the emerging COVID-19 pandemic.

Now the company can go to the market with a much more positive story to tell after its 2020 accounts, lodged with ASIC, show a return to profit on continuing operations of more than $13.5m, from a loss of $163.958m.

Revenue for the year to the end of September was just under $1.2 billion from $1.072bn in 2019. It is believed a sizeable portion of that performance came from the Fantastic Furniture division.

Greenlit also received JobKeeper in 2020.

Underlying earnings for the company from continued operations doubled to $103m.

The retail group’s return to profit growth comes after a horrid few years dogged by the financial scandals centred around its South African parent Steinhoff International, which was plagued by a multi-billion dollar accounting fraud and which nearly destroyed the entire business.

Since the scandal erupted Greenlit has attempted to distance itself from its parent, and has focused on its Australian operations which also include Plush and OMF.

It also triggered a massive restructure to shore up its finances, as well as a sale of its general merchandise chains Best & Less and Harris Scarfe to private equity firm Allegro Funds. In December Greenlit repaid in full all external debt that allowed the restructure of Fantastic Furniture.

Greenlit is now once again considering an IPO.

“In November 2020, the group decided not proceed with the proposed initial public offering of Fantastic Furniture at that time,” the Greenlit financial report lodged with ASIC said.

“Despite demonstrating a track record of growth in sales and market share, and receiving positive feedback from potential investors as to the quality of the business and management team, it was determined that the IPO should be postponed until later in 2021 when it is expected that investors will be less cautious about the market dynamic beyond the prospectus forecast period.”

Greenlit said in its financial report that the decline in consumer sentiment in 2020 from the COVID-19 pandemic generated a sales drop in portfolio brands operating in higher market segments and higher ticket categories.

“Encouragingly, consumer demand rebounded strongly in May 2020 and this momentum carried through the balance of the year despite closure of all group stores in the state of Victoria across July to December 2020.

“The group had successfully achieved further operational and strategic milestones despite COVID-19 impact and demonstrated the resilience of the group‘s key assets in a tighter retail trading environment.

“The directors take confidence from improved market and trading conditions in the last quarter of the year and continued exceptional growth in e-commerce sales following investment and amalgamation of expertise in this area from across the group.”