City Chic aims to snap up e-commerce assets from bankrupt US fashion retailer
Written on the 27 September 2019 by Matt Ogg
An Australian company that emerged from the shadows of Specialty Fashion Group (SFG) is now on the acquisition path for the e-commerce assets of a bankrupt US retailer.
After returning to profit in its first year under a new name, City Chic Collective's (ASX: CCX) share price has steadily climbed from just 20 cents at the start of 2018 to $2.54 this morning.
In other words, management know a thing or two about turning a business around and it's no surprise they've sought a company in the doldrums to foment US expansion.
The e-commerce assets of US-based plus size apparel retailer Avenue Stores will go up for auction in early October, and City Chic has been nominated as the "stalking horse bidder" which is the suitor that places the first low-end bidding price.
If City Chic is successful with its US$10 million bid the capital would be funded by a mix of cash and debt with the transaction expected for completion by the end of October.
Avenue entered into Chapter 11 bankruptcy in August 2019 and has been closing its physical store network, but City Chic highlights its e-commerce assets include a well-established customer database and inventory.
Avenue's e-commerce division notched sales of around US$27.1 million from January through May 2019, representing 36 per cent of the group's total sales.
"City Chic continues to conduct operational due diligence and assess the opportunity in light of the impact of the bankruptcy process and the store closures on the e-commerce business," the Australian company said.
"As Stalking Horse Bidder, City Chic has entered into an asset purchase agreement that is subject to City Chic being the highest bidder at the auction and approval by the US Bankruptcy Court in Delaware.
"There is therefore no guarantee City Chic will be successful in its bid to acquire the Avenue e-commerce assets. City Chic will keep the market updated as the transaction progresses."Never miss a news update, subscribe here. Follow us on Facebook, LinkedIn, Instagram and Twitter.
Business News Australia
Author: Matt Ogg