INSIDE RETAILING WEEKLY
Clothing business backed by Deutsche Bank.
Deutsche Bank has appointed a former Myer director, Eric Morris, to develop a new clothing business for a public listing on the Australian Stock Exchange.
Deutsche Bank currently has a majority stake in two clothing brands, Yarra Trail and Breakaway, and is negotiating with up to five other companies with a view to building a substantial new clothing wholesaler.
The bank has already formed an entity, Pacific Apparel Solutions, to acquire and integrate suitable clothing businesses for a public float.
Morris said the strategy would provide significant benefits for the industry, creating a public company with the size and scale of operations to compete effectively and to develop a product mix and services to support the major retail customers.
He said the business could provide a lot of synergies and reduce costs, creating the opportunity to direct more resources in product and range development and marketing.
With Target discount department stores sourcing more of its clothing and footwear range direct from China and other South East Asian markets and Myer keen to follow suit in a bid to improve its margins, the creation of substantial new wholesale entity is also timely, according to Morris.
Pacific Apparel Solutions has a budget to acquire more businesses to add to Yarra Trail and Breakaway, and Morris said negotiations were currently proceeding with five businesses.
The company could have about six or seven companies amalgamated in the short term, and potentially more in the future, depending on market conditions and industry developments such as Myer sourcing policies.
Morris said Pacific Apparel Solutions wanted well-established brands in men’s women’s and children’s wear, but may also examine opportunities with accessories.
Yarra Trail is a mainstream clothing brand aimed at the 25 to 40 market, while Breakaway is a mid-market rand with a slightly older customer profile. Both brands are sold through Myer and David Jones department stores.
Before taking on the Pacific Apparel Solutions job, Morris worked on private label development for Myer. He also has previous experience in the footwear and clothing industry as regional director for Reebok Asia Pacific.
Pacific Apparel Solutions is expected to be listed in three to five years with a likely value of more than $200 million. Deutsche Bank has an 80% stake in the company and will fund further acquisitions.