Wholesale giant on the acquisition trail

Victorian wholesale group Mercury Brands has seen its client base soar by 65 national retailers as a result of its latest apparel acquisition.  The company, formerly trading as Austin Group, has secured distribution rights for WESC, J & Company, Lifetime Collective, Black Orchid and headwear brand Kangol in its purchase of St Kilda headquartered fashion group The Factoree.

Mercury Brands paid $95,000 for the assignment of distribution agreements and will make deferred payments of 7.5 per cent of the net sales of licensed products, with total payments capped at $350,000 and payable over two years. It is also buying stock on hand for $120,000. The Factoree generates approximately $2 million revenue per annum.

Commercial operations general manager Ron Luff said the acquisition was the result of five months of negotiations. The two businesses shared a "large number" of mutual accounts, with the acquisition adding an additional 65 to Mercury Brands' client base.

"The deal came about through The Factoree recognising that to take their brands to the next level, they needed greater infrastructure and a partner that understands brands," he said. "I think our size in terms of our sales force, retail support staff and our ability to market brands will enable The Factoree to grow organically and with this infrastructure support, we would expect that will grow quite quickly."

Mercury Brands would be responsible for all back end operations such as finance, freight and warehousing to allow staff at The Factoree to focus on brand management. All existing staff would be retained, Luff said. "This is truly a partnership that allows The Factoree to operate autonomously at the front end and we will take care of the back end. We are looking to grow The Factoree account base in suburbs or towns where we don't have any retailers representing the brands while continuing to support the existing account base."

Mercury Brands hoped the new partnership would help stem its profit slide for the last two financial years, with the company posting a $7.8 million loss for fiscal 2008. Losses included $900,000 in redundancy costs associated with the restructure of the company and $600,000 in restructuring consultancy. 

Fashion labels under the Mercury Brands banner include Contempo, Rochford, Billiecart, French Kitty, Purr, No Fear, Crusty Demons and the recently acquired distribution rights for American denim label Chip and Pepper.

By Assia Benmedjdoub