PAT­TERN FOR SUC­CESS

Tru­worths buys Naartjie in bid to ex­pand kidswear of­fer­ing and raise sales vol­umes

The Star Early Edition - - BUSINESS REPORT - Nom­pumelelo Mag­waza

IN A BID to grow its mar­ket share in the kidswear mar­ket, Tru­worths yes­ter­day ac­quired chil­dren’s fash­ion re­tailer Naartjie. Last month it bought Earthchild.

Tru­worths shares gained 3.25 per­cent to close at R75.52, the big­gest jump in almost three months.

Out­go­ing chief ex­ec­u­tive Michael Mark said: “I be­lieve Naartjie has ex­cel­lent growth po­ten­tial after an ini­tial con­sol­i­da­tion phase and will re­in­force our growth prospects in the kidswear mar­ket.”

The listed re­tailer said it had en­tered in to an agree­ment with Naartjie to buy its 26 stores. It added that the in­volved par­ties had agreed not to dis­close the price of the deal, which would be set­tled in cash.

The deal is await­ing ap­proval from the US courts, given that Naartjie's US-based hold­ing company is in bank­ruptcy pro­ceed­ings.

Tru­worths has had a hard time in­creas­ing its sales vol­umes this year as con­sumers strug­gle to pay for their credit store ac­counts and fail to ac­cess credit. Con­sumers are grap­pling with ris­ing costs, a weak job mar­ket and high lev­els of in­debt­ed­ness.

The re­tailer is sit­ting on a cash pile of about R1.6 bil­lion and has been look­ing for vi­able ac­qui­si­tions.

Naartjie was founded in Cape Town in 1989 and sells ranges of cloth­ing, ac­ces­sories and footwear for new­born to 10-year-old chil­dren from 26 stores across South Africa.

The company was taken over by US in­vestors in 2001. Naartjie has 55 stores in the US and e-com­merce business shipping clothes to more than 200 coun­tries. The US as­sets are not in­cluded in the Tru­worths ac­qui­si­tion.

Mark said Naartjie would add scale to Tru­worths’ kidswear of­fer­ing.

The re­tail group also re­cently an­nounced its in­ten­tion to ac­quire the Earthchild business, which will add a net­work of 43 stores to Tru­worths’ 600 out­lets across the coun­try. The ef­fec­tive date of the ac­qui­si­tion is the first quar­ter of 2015.

Tru­worths also owns the Iden­tity, Uzzi and YDE brands.

He said Earthchild and Naartjie to­gether with the re­tailer’s LTD Kids range would en­hance its chil­dren’s em­po­rium brand ap­peal.

“We are com­mit­ted to pro­vid­ing the nec­es­sary fi­nan­cial and other re­sources to place Naartjie business on a sus­tain­able foot­ing and, there­after, in­crease a num­ber of out­lets, in­tro­duce a credit fa­cil­ity for cus­tomers in due course and pos­si­bly ex­pand the op­er­a­tions beyond South Africa.”

Mark has de­cided not to re­new his con­tract, which ex­pires at the end of June.

He will be re­placed by Jean-Christo­pher Garbino, who has in­ter­na­tional ex­pe­ri­ence.

PHOTO: SIM­PHIWE MBOKAZI

Tru­worths has an­nounced that it has en­tered into an agree­ment with Naartjie and its US hold­ing company to ac­quire the lo­cal business.

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