Johannesburg - JSE-listed retail giant Woolworths has continued on its buying spree Down Under, announcing yesterday that it had acquired a 100-percent stake in leading Australian menswear brand Politix for an undisclosed amount through its subsidiary Country Road.
Woolworths said the planned acquisition would be funded from its own resources and expected the transaction to make an immediate impact on its earnings per share.
The acquisition is subject to regulatory requirements.
This transaction comes after a management shake-up at Country Road that saw chief executive Matt Keogh leaving the company last month after sales dropped 3.9 percent lower than the previous year.
Keogh will be replaced by Scott Fyfe, who is expected to assume his responsibilities next year.
Woolworths chief executive Ian Moir would work with the executive team until the time.
Moir said the planned acquisition was part of the group’s strategy to diversify its portfolio of iconic brands in the southern hemisphere.
“The acquisition of Politix is a logical acquisition that will deliver value for Woolworths shareholders, Politix will extend Woolworths menswear offering in Australia and in time we expect to roll out the brand in David Jones and into New Zealand,” Moir said.
Retailer
Politix is a Melbourne-based designer menswear retailer that has 75 stores, including 31 concessions inside Myer stores across Australia.
In the past financial year, the company raked in $56 million (R765m) in sales, but recorded markdowns that led to a 1.5 percent decline in gross profit margins to 59.4 percent.
The Politix acquisition follows the 2014 deal that saw Woolworths buying Australian department store chain David Jones for R23.3 billion.
Other clothing brands owned by the company in Australia include Witchery, Trenery and Mimco.
Woolworths has 59 stores in 11 countries outside South Africa, but withdrew from the Nigerian market in 2013 blaming high rental costs and difficulties with its supply chain.
Politix chief executive Peter Sitch said the deal would be beneficial to the company’s customers and would enable the business to expand into the international market. “This is a tremendous result for our people and our customers. WHL is a world class retailer and will provide the best possible platform for further domestic growth and future international expansion of our brand,” said Sitch, who bought the company in 2006 when it only had 16 stores and build it to its current compliment.
Next phase
Moir said he was delighted at the opportunity to work with Sitch and the Politix team to take Politix to its next phase of growth. “Peter Sitch and his team have done a fantastic job over the past 10 years growing the company to become the success story it is today.”
Byron Lotter, portfolio manger at Vestact said while he believed that the deal was small in value, it still showed Woolworths’ appetite for consolidating its footprint in Australia.
“Woolworths has really done well to buy Australian brands and bringing them to South Africa, they have plenty of high-end store space to do that,” Lotter said.
Woolworths shares were unchanged at R78 yesterday.
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