Fashion chain Noni B will buy James Packer’s Pretty Girl Fashion Group and create a clothing giant that is set to take over the wardrobes of Australia’s middle-aged women.
Pretty Girl Fashion, owned by Mr Packer’s Consolidated Press Holdings, has about 370 stores under the Rockmans,Â BeME,Â W.Lane andÂ Table EightÂ brands.
Noni B, which has about 200 stores, announced on Tuesday it would buy the group for at least $75 million, makingÂ itÂ one of Australia’s largest specialty clothes retailers.
The two groups’ customers are mostlyÂ women aged 50 and over, a market that Noni B chief executive Scott Evans said offered unique opportunities.
“When you look at most business today, people are focusing younger and younger,” Mr Evans said.
“Our lady has life experience and knows what she likes and know what she wants.
“If we do a good job and if we can supply her with the fashion and taste level that she needs and wants in an experience that beats her expectation, then she’ll reward us with her loyalty.”
Mr Evans said the merger would put Noni B in the same league as the Specialty Fashion Group, owner of Millers, Crossroads, Katies; and Solomon Lew’s Premier Investment, which owns Just Jeans, Jay Jay and Portmans.
He said the brands would maintain their own identitiesÂ while improving efficiency in logistics and product sourcing behind the scenes. There was room to grow the footprint further, especially through W.Lane and BeME, Mr Evans said.Â Â
Steve Kulmar from consultancy Retail Oasis said middle-aged women were surprisingly difficult for apparel retailers and the mergedÂ company would live or die on its ability to get itsÂ styleÂ offerings right.
“Women 50-plus certainly want classic fashion but they don’t want to be out of date,” Mr Kulmar said.
“The frequency of purchase is lower, therefore you have to increase the average value of that purchase.
“If you get it wrong it really hurts because quitting that higher-price stock can take quite a while.”
The acquisition highlights the strength ofÂ Noni B’sÂ recovery from the brink of collapse in 2014.
Investment company Alceon Group increased its stake toÂ 77 per cent that year and has overseen the company’s rise from 50c a share to Wednesday’s price of $1.10.
Mr Packer’s CPH put Pretty Girl up for sale in February as the latest of its non-casino assets to be sold off, including investments in meat production, cosmetics, entertainment and media.
Noni B chairman and Alceon executive director Richard Facioni said Noni B management had been eyeing off Pretty Girl for some years and the sale had comeÂ at a fortuitousÂ time.
“I think it’s fair to say if CPH put it on the market 12 months earlier we wouldn’t have been in a position to buy it,” Mr Facioni said.
Noni B will pay Mr Packer’s CPH $65 million in cash and $9.7 million in shares under the binding agreement, plus an extra $7.3 million cash depending on Pretty Girl’s performance over the next two years.
CPH will hold about 10 per cent of the Noni B Group through the deal.
Noni B will fund the purchase with a $40 million rights issue at $1.25 a share and $30 million bank loan.