The Witchery Group comprises of two retail brands, Witchery and Mimco.
With 40 years of trading, Witchery is a leading fashion brand offering women’s, men’s and kids apparel and accessories with 210 stores and concessions in Australia, New Zealand, South Africa and Singapore. Mimco is one of Australia’s favourite designer accessory brands offering accessible luxury designed with quirk. Mimco offers bags, jewellery, shoes, sunglasses and watches in the luxury end of the market. Founded in 1996 it currently operates through 96 stores and concessions in Australia, New Zealand and Singapore and a significant online business.
Commenting on the acquisition, Woolworths CEO and Chairman of Country Road, Ian Moir said, “The acquisition of Witchery Group creates one of Australia’s largest speciality fashion retailers with complementary brands and a strong position in the mid to upper tier specialist retail sector. The acquisition delivers an attractive portfolio of owned brands, greater scale, diversified revenue streams and industry leading margins.”
The Witchery Group delivered A$266 million revenue and A$34 million normalised EBITDA in the financial year 2011.
The acquisition has the capacity to create significant shareholder value through the delivery of synergies that are estimated by Country Road management to be approximately A$10 million on an annualised basis and expected to be achieved over 4 years.
Expected synergies include supply chain efficiencies, integration of systems and structures, optimisation of sourcing opportunities and increased growth opportunities in new geographies, categories and channels.
Australia's specialist apparel retail market is currently estimated at A$12.1 billion. The country provides an ideal retail apparel demographic with approximately 52% of the population aged between 29-64, and a total population expected to grow from 23 million to 35 million by 2050. Australia's apparel market is currently at a cyclical low, providing an ideal opportunity for Country Road to consolidate its position ahead of the expected economic recovery.
The transaction will be funded through a combination of acquisition debt of A$92 million, raised from Australian banks, and a rights issue by Country Road. As majority shareholder in Country Road, Woolworths has undertaken to follow its rights.
We are pleased to announce that Iain Nairn, currently the CEO of the Witchery Group, will take over as CEO of Country Road upon completion of the acquisition. Howard Goldberg, the current CEO of Country Road, will be leaving Country Road once the acquisition is completed, having provided strong leadership and developed a strategy that has delivered solid results in a challenging retail environment.
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