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Furniture retailer Nick Scali (ASX: NCK) has today entered into a binding agreement to acquire sofa merchant Plush Think-Sofas (Plush) for $103 million, adding a network of 46 showrooms and an e-commerce platform to its portfolio.
The acquisition, to be funded through a combination of cash and new debt, is due for completion in the fourth quarter of 2021 and gives Nick Scali opportunities for future growth including store expansion for both brands in Australia and New Zealand.
Founded in 1999 as Plush Leather, Plush has since grown into a mid-market, made-to-order sofa retailer with a focus on an aspirational customer demographic.
Over its lifetime, Plush has sold sofas, modular lounges, recliners, occasional chairs, ottomans and sofa beds to more than 250,000 customers.
Post-acquisition, Nick Scali’s current store footprint will expand to a total combined 108 stores in Australia and New Zealand. From there, the new parent plans on pushing Plush to achieve a store network target of 90-100 stores.
“Plush is a high-quality Australian sofa retailer with a strong track record of profitability and performance over a long period of time,” Nick Scali CEO Anthony Scali said.
“The acquisition is a strategic opportunity for Nick Scali and will allow us to leverage the increased scale of the combined group whilst providing a platform to significantly grow the store network.”
The acquisition follows a bumper FY21 for Nick Scali which doubled net profit after tax (NPAT) to $84 million thanks to a significant reduction of expenses despite rising freight and supply chain costs.
The company also performed well online, with the e-commerce segment’s earnings surging by a multiple of almost 15 times to $8.8 million.
Shares in NCK are up 4.29 per cent to $12.64 per share at 11.29am AEDT.
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