RM Williams earnings set to surge says owner as it targets potential bidders

By

Sandra Halliday

Published
Oct 11, 2019

Up-for-sale Australian brand RM Williams’ earnings are forecast to more than triple by 2024. That’s according to investment bank Goldman Sachs in a pitch sent out to attract interest from potential trade and private equity buyers.

The prediction is based on its expansion plans as the business grows in its Australian and UK ops, and accelerates expansion in the US and in other parts of the world.

According to a flyer sent to interested parties and seen by The Australian Financial Review, RM Williams recorded A$23m (€14m/£12m) in EBITDA in the 2019 financial year, and this was expected to increase to A$34m in 2021 and A$83m in 2024. 

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Revenue from its Australian business was slated to rise by A$98m for the five-year period, across online and in-store. That's on the back of 12 consecutive quarters of like-for-like sales growth in its Australia and New Zealand stores, which account for 90% of the business. 

Total revenue was also up 10% a year on a compound annual growth rate basis in the four fiscal years to 2019. It was also operating at a 62% gross margin.

Interested parties were told there were 12 new domestic retail stores in the planning stage with strong growth expected in existing wholesale channels, the newspaper said.

Clearly, with so much of the business focus on the ANZ market, there’s plenty of growth potential in other countries and the firm has been expanding its British ops. In the UK, revenue was projected to be up A$28m on the back of two new stores and 90 new wholesale doors, while US revenue growth over the period would be worth A$70m, boosted by 17 new stores and 200 new wholesale doors.

The flyer said RM Williams was also targeting its online sales to reach 10% of total sales. 

Owner L Catterton appointed Goldman Sachs to find a buyer for RM Williams in May, according to the report, with speculation that giant consumer brands companies such as VF Corp, and private equity firms including Fosun and Lunar Capital, plus local giants, were likely to be interested.