Close×

Accessories retailer Lovisa has just made a $2 million acquisition that will spread its global footprint.

The retailer has acquired 21 fashion accessory stores in South Africa.

The majority of these will be rebranded immediately following the handover.

The transaction has been agreed with a completion and store hand over date of April 1.

Completion is subject to approval by the Reserve Bank of South Africa, which is expected to proceed without issue.

The stores currently retail a range of fashion accessories and are a similar store size to the Lovisa concept.

The purchase price for this transaction is $2 million with a further deferred payment of $250k payable 12 months post transaction.

Currently this business has assessed tax losses with a value of approx. A $850k which Lovisa forecasts to benefit from in future trading periods.

The acquisition and refurbishment costs will be funded from loan facilities.

Lovisa CEO Shane Fallscheer said the acquisition is a win for the company.

"We are very excited by this transaction as it quickly takes us beyond 30 stores in South Africa , positioning us as the largest fashion jewellery retailer in South Africa and giving us a national footprint of stores in what is one of our most successful markets.

"This places Lovisa well ahead of our growth forecasts and enables us to continue to look for opportunities in South Africa whilst moving our focus to other growth markets , both company owned and franchise."

The company is working towards a rapid re-fit program to maximize the performance of the stores , with the bulk of the work to be done in three months from handover of stores.

Lovisa is budgeting refurbishment costs of approximately $57,000 per store, in line with prospectus forecast, and $50,000 of inventory per store.

Of the 21 stores purchased , there is minimal crossover from the current Lovisa portfolio.

Lovisa is in the process of evaluating sites where there is crossover to determine if the company will trade two stores in these centres or surrender the weakest location to the landlord .

Lovisa currently estimates closure of five of the 21 stores within six months of acquisition

Lovisa predicts these stores will contribute an EBIT of $1.75 million in fiscal 2016. T

Lovisa’s growth strategy as per prospectus forecast is as tabled below .

All regions are in line or ahead of the prospectus store number forecasts.

lovisa

comments powered by Disqus