Specialist 'curvy apparel' retailer City Chic Collective (ASX: CCX) has rescued the century-old Evans brand from the rubble of its collapsed parent Arcadia Group in a deal worth £23.1 million ($41 million).
City Chic's acquisition of Evans, which includes the e-commerce and wholesale arm but not the group's network of 100 stores, marks a new push into the UK market for the Australian company which has been acquisitive in the US over recent years.
Arcadia Group, which owns a suite of major brands including Topshop, Topman, Miss Selfridge, Dorothy Perkins and Burton, was placed into administration on 30 November following a tough year for the retail market in the UK.
City Chic is poised to settle on the deal on 23 December, giving it access to what the company describes as Evans' "significant and loyal customer following" that delivers 19 million website visits a year.
Evans generated about £23 million ($41 million) in online sales last financial year while the wholesale business delivered had sales of about £3 million ($5.3 million).
The group, including franchise stores, generated more than £60 million ($106 million) in annual sales prior to COVID-19.
"I have followed Evans for over a decade and seen how within Arcadia's portfolio the brand has evolved from a dominant high-street retailer into a more digitally focused business," says City Chic CEO Phil Ryan.
"We had a successful partnership with Evans for many years which was a great channel for the City Chic brand in the UK.
"Evans gives us an excellent foundation in a new geography to grow our collective and is a brand which aligns with our existing product streams."
Ryan says the acquisitions meets the company's strategic objective of growing through global customer acquisition digitally in the $50 billion curvy apparel market.
"In addition to providing a launching pad into a new market, we are confident we can deploy our lean, customer-centric operating model to drive revenue growth and cost efficiencies in the existing business.
"We have a great opportunity ahead of us to develop the third major region for the City Chic Collective."
Evans was established as a high-street retailer in the UK in 1930 but its store footprint has shrunk in recent years due to customers transitioning to digital purchases.
City Chic says this trend will minimise any leakage of online customers following the acquisition, which is expected to be earnings accretive for the company in the first full year of ownership.
City Chic will fund the acquisition from existing cash reserves which stood at $121 million on 30 November. It notes that it will not draw on its existing $40 million debt facility.
In recent years City Chic has expanded its presence in the US market through the purchase of Avenue and Hips & Curves.