Woolworths grows Australia footprint
2 August 2012
South African retail group Woolworths Holdings is to expand its footprint in Australia through subsidiary Country Road's acquisition of fashion brand Witchery Group, the company announced in Cape Town on Wednesday.
The deal, worth AU$172-million, is expected to boost Woolworths' operations in
Australia, which began in 1998 when the South African company secured an 88%
controlling interest in Country Road.
Woolworths rebuilt Country Road and re-launched the brand in 2004. "[It] was
successfully repositioned, grew sales, and won the retail industry’s top honour as
Australian Retailer of the Year in 2008," Woolworths said in a statement.
"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," said Woolworths chief executive officer and Country Road chairperson, Ian Moir.
acquisition delivers an attractive portfolio of owned brands, greater scale,
diversified revenue streams and industry leading margins."
Witchery Group's portfolio is made up of two 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," he said.
Mimco sells luxury bags, jewellery, shoes, sunglasses and watches with 96 shops and
concessions in Australia, New Zealand and Singapore, as well as a successful online
The group is performing well financially and made $266-million in revenue in 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 $10-million on an annualised basis and expected to be achieved over four
These synergies refer to supply chain efficiencies, integration of systems and
structures, optimisation of sourcing opportunities and increased growth opportunities
in new geographies, categories and channels.
The deal will also allow Woolworths - through Country Road - to consolidate its
position in Australia.
Funding for the acquisition will come through a combination of acquisition debt worth
$92-million raised from Australian banks and a rights issue by Country Road, which
Woolworths as majority shareholder will follow. It has already received the required
exchange control approvals from the South African Reserve Bank.