SYDNEY — Australian department store chain Myer said Monday it has purchased a 65 percent stake in Sass & Bide for 42.3 million Australian dollars, or $42.8 million, plus a performance bonus based on fiscal 2011 sales results.
The transaction is expected to be completed in April, Myer said, explaining that the Sydney-based brand will be launched in about 30 Myer stores over the next 18 months.
“The investment in Sass & Bide is entirely consistent with our strategy for growth, which is about opening new stores, investing in store refurbishments and refreshments, growing and leveraging [Myer’s Reward Card program] and introducing new product categories, brands, concepts and concessions,” the company stated. “Sass & Bide’s highly experienced and successful management team will continue to drive the success and will also provide us with valuable insights and exposure to specialty retail.”
Sarah-Jane Clarke and Heidi Middleton founded Sass & Bide in 1999 as a street stall selling customized jeans at London’s Portobello Market. The label later branched out into ready-to-wear. Sass & Bide generated sales of about 37 million Australian dollars, or $37.5 million, in fiscal 2010 and delivered annual sales growth of 50 percent year-on-year over the past two years, according to Myer.
At a press conference later in the day, however, Myer chief executive officer Bernie Brookes said the brand was on track to generate just 40 million Australian dollars, or $40.6 million, in sales in fiscal 2011.
Accessories and denim account for a third and a quarter, respectively, of Sass & Bide’s sales, reported Brookes, who noted that Myer also would be looking at “stretching Sass & Bide into other areas — perfume and sunglasses, for instance.”
Sass & Bide now operates 15 stand-alone boutiques in Australia and New Zealand, with wholesale accounts in boutiques and department stores across Australia, New Zealand, the U.S., U.K. and the Middle East.
“Myer has committed to significant floor space across its stores which will ensure we offer a great range,” said Middleton. “We can also see great opportunities for our business to continue to expand overseas by working together to open stand-alone stores and sharing in Myer’s sourcing, networks and supply chain.”
This is Myer’s first acquisition since its initial public offering in November 2009, worth 2.2 billion Australian dollars, or $2.23 billion. In recent years, the retailer has launched a number of diffusion lines in partnership with some of Australasia’s best-known fashion brands, including Wayne Cooper and New Zealand’s Karen Walker, with several similar new deals said to be in development.
The Sass & Bide acquisition was revealed after Myer issued a profit downgrade, warning that its 2011 earnings could be as much as 5 percent lower than 2010 as the result of fragile consumer confidence over the past six months. The news prompted Myer’s share price to drop by as much as 13.3 percent throughout the day, its biggest one-day fall since the IPO.