Transition period takes toll on Naked Brand Group’s bottom line
today Dec 20, 2018
Intimates and swimwear company Naked Brand Group Limited announced widening losses in the first half of fiscal 2019 on Thursday, as mounting charges related to its structural transition compounded slipping sales.
Naked reported a net loss of $18.07 million for the six-month period ended July 31, 2018, compared to a loss of $12.5 million in the first half of fiscal 2018.
The company’s expanding losses were, in part, due to a decline in net sales, which fell 5.1% to $38.6 million, down from $40.6 million in the prior-year period, a decrease that Naked has attributed to vendor supply issues.
However, the company’s results were also negatively affected by increased operational costs and charges related to its structural transition following the completion of its merger with fellow intimate apparel company Bendon Limited in June.
As the newly merged company moves forward, it has also been investing in expanding both its e-commerce presence and its brick-and-mortar footprint in Australia and New Zealand, leading to further costs.
“The first half fiscal 2019 was a very pivotal time for the newly combined company as we integrated both businesses, cleaned up our capital structure and eliminated some divisions in order to position Naked for the next phase of our e-commerce business,” said Naked Brand Group CEO Justin Davis-Rice in a release.
“While today’s reported financial results reflect a period of transition, we believe the steps taken during this time will position the company for accelerated growth in the new year,” he added.
Since the end of July, the company has also completed its acquisition of FOH Online Corp., the Fredericks of Hollywood global e-commerce licensee.
Sapinda Holding B.V.’s plans for a potential investment of $25 million in Naked were postponed in October, when the La Perla parent company said that the current stock market volatility had led it to reconsider its decision.
Brands in the Naked Brand Group portfolio include Naked, Bendon, Pleasure State and Heidi Klum Intimates. The company’s products are currently distributed in 44 countries around the world through 6,000 retail doors, as well as through a network of e-commerce sites and 61 company-owned Bendon stores in Australia and New Zealand.