RAGs to riches: new player in menswear
The privately-owned company formerly trading under Tarocash Enterprises - which headed both the Tarocash and Connor menswear brands - has just signed an agreement to acquire the assets of its chief competitor, YD.
It has also radically restructured its ownership model.
Included in the restructure is the formation of a new umbrella company, dubbed 'Retail Apparel Group' (RAG), which will replace the 'Tarocash Enterprises' banner and oversee the operations of all three menswear labels.
The new enterprise comes hot on the heels of a major shareholding agreement in 2004, when private equity management fund Champ Enterprises invested $31 million to expand Tarocash operations on both a national and international scale.
RAG CEO Stephen Leibowitz said the expansion strategy has now been fully realised.
"With the formation of RAG we will be the biggest menswear retailer in Australia. It will increase the opportunity for retailers to stock more of our products and equip us with the capability to expand our retail presence across the board."
Leibowitz said while the company had held talks with seven other potential businesses partners late last year, it had been eyeing YD "from a distance" for some time. He said the business, which currently operates 51 stores throughout Australia, would provide RAG with a sizeable opportunity to bolster its domestic retail and wholesale operations.
YD managing director Todd Trenear will retain his position at the company and effectively lead the charge for its expansion.
"Few brands will aim at the mass market consumer like we do," Leibowitz said. "With this deal and with Todd's expertise, we'll be specialists in our area by catering for all three demographics - Connor for the older man and Tarocash and YD for younger, dressy consumers."
Along with expanding the presence of YD to match that of Tarocash - which reportedly records profit growth of 15 per cent growth per annum - the company would look at developing its current stable of brands over the next year. This includes a further five Tarocash store openings in New Zealand and South Africa and eight Connor stores in Australia during the first half of 2007.
Although Leibowitz declined to reveal the financial value of both the company's expansion program and the YD acquisition, he said it was "substantial" and by no means the final stages of its growth. RAG has neither ruled out further acquisitions nor the prospect of becoming a listed enterprise, he said.
"We're very much a vertical retailer and always on the look out for new business opportunities. We decided to rename ourselves to RAG so the brands we do acquire aren't minimised by the corporate name 'Tarocash' which reflects that brand only. This is particularly important now we're financially capable of acquiring anything that comes up."
Although job losses are expected as part of the restructure, Leibowitz would not confirm any redundancies. Instead, he SAID it would look to develop its current ties with manufacturers and other related business as the company expanded.
"Everyone is set to benefit in the long-term as a result of this venture."