Super Retail Group, a leading Australian sports retailer, has agreed to fully acquire Macpac for $144 New Zealand dollars (€85.8m-$105.8m), as a means to build up its business in the outdoor market across Australia and New Zealand with a four-pronged approach.
Owned at a majority by Champ Ventures, Macpac is a vertically integrated retailer with 54 stores in Australia and New Zealand, selling primarily its own branded lines of apparel, equipment and accessories. Super Retail Synergies are expected in the supply chain, procurement, marketing and retail operations between Macpac and Super Group's own BCF (Boating, Camping and Fishing) operations and its Rebel Sports stores.
Super Retail Group said that Macpac and Rays, its retail banner of outdoor equipment stores, are set to be consolidated under the Macpac brand and under the leadership of Alex Brandon, Macpac's managing director. The new owner intends to build a group with four sales channels under the Macpac brand, while closing or rebranding some of its loss-making Rays stores. Small stores will continue to sell Macpac branded products. Large-format stores will offer a more extensive range of products from major global brands and Macpac's range. An e-commerce website will sell all of the same products, providing detailed product information and services. Finally, a wholesale arm would be selling Macpac items to other retailers.
Peter Birtles, chief executive of the Super Retail Group, said in a statement that Macpac has performed strongly in the last years but there remains plenty of space to further leverage the brand and to continue expanding, with new stores and growth in digital and commercial channels. Super Group added that Macpac's resources in design and apparel sourcing would add value to other parts of its business.
Macpac is expected to generate sales of about 95 million New Zealand dollars (€56.6m-$69.7m) and pro-forma Ebitda of $NZ16 million (€9.5m-$11.7m) in the fiscal year until the end of March. The company's sales moved up by 20.9 percent for the nine months through the end of December, with a rise in comparable store sales of 7.4 percent.
The purchase agreement comes after Super Retail Group launched a trial two years ago with big-box stores for Rays, in order to capitalize on the growth of an Australian outdoor retail market estimated at 2.2 billion Australian dollars (€1.4bn-$1.7bn). The company came to the conclusion that the most value-accretive strategy in the outdoor sector was to acquire, integrate and grow.
Amounting to 9.1 times Ebitda, the acquisition is to be funded from existing debt facilities. However, Super Retail Group added that it secured agreements from its banking partners to raise its debt facilities by A$150 million (€95.6m-$117.8m), to make sure it retains enough capacity to execute its broader omni-channel retailing strategy. The deal is expected to be completed at the end of March. The Australian Financial Review reported that three foreign buyers had been interested in Macpac's acquisition.
Macpac was established by Bruce McIntyre in Christchurch in 1973. Champ Ventures bought 90 percent of Macpac about two years ago. The owners included Bernie Wicht and Jan Cameron, the co-founder of Kathmandu, a rival New Zealand outdoor brand. They and Brandon remained minority shareholders at the time.
Super Retail Group announced the agreed purchase while outlining results for the six months until the end of last year. Sales of its leisure retailing unit were down by 3.8 percent to A$299.1 million (€190.6m-$234.8m), with a same-store increase of 1.6 percent. Encompassing Rays and BCF stores, the division's operating profit shrank by 20.4 percent to A$16.4 million (€10.4m-12.9m). The group's sports retailing business saw the conversion of 68 Amart stores to the Rebel banner during the six-month period. This division raised its first-half revenues by 2.7 percent to A$503.8 million (€321.1m-$395.6m), while its operating profit jumped by 1.6 percent to A$51.7 million (€32.9-$40.6m).
Macpac's agreed sale comes just a few weeks after the announcement that Icebreaker, another iconic outdoor brand from New Zealand, is to be taken over by VF Corporation.