Super Retail Group (ASX: SUL) has entered an agreement to acquire New Zealand outdoor brand Macpac for $135 million.
The ASX listed company says it will fund the acquisition of 54 Macpac stores across Australia and New Zealand with existing debt facilities.
Despite the announcement, the company reported a half yearly profit fall of three per cent to $72.2 million and its shares are down by almost 16 per cent in early trade.
The company says the motivation behind acquiring Macpac is part of a larger strategy to "acquire, consolidate and grow" to create a "big box adventure outdoors retail product" for Australia. The group intends to consolidate the Rays and Macpac businesses under the Macpac brand.
Macpac will join a suite of brands owned by Super Retail Group, including BCF, Rays, Rebel, and Supercheap Auto.
Macpac's management team, under managing director Alex Brandon, will lead the combined business.
Peter Birtles, group managing director and CEO of Super Retail Group, says the acquisition of the New Zealand brand is consistent with its current strategy.
"The Macpac business has performed extremely well over recent years, yet there remains a significant opportunity to grow the business in the near future through opening new stores and growing its digital and commercial channels," says Birtles.
"The integration of the business with Rays provides an opportunity to position Macpac as the leading outdoor adventure specialist across Australia and New Zealand providing a much broader range of quality product information and services than any other retail business."
"Super Retail Group will be able to leverage its capabilities in supply chain, marketing, procurement and retail operations to add value to Macpac, while Macpac's capabilities in design and apparel sourcing will add value for BCF and Rebel.
"Importantly, [the Macpac team] have a very similar culture to Super Retail Group. Alex Brandon and the wider team have built a successful business in a short period of time and have achieved strong growth momentum. We look forward to welcoming them as fellow team members."
Macpac was founded in 1973 selling hiking packs in Christchurch. It commenced retail operations in 2008 and now operates as a vertically integrated retailer with 54 stores across Australia and New Zealand.
The deal is expected to be completed by March 31 and Super Retail Group expects costs associated with the integration will amount to $13 million over the coming two years.
The group also announced its half year results, and reported a net profit after tax of $72.2 million.
Half year sales for the group were $1.3 billion, an increase of 2.2 per cent, and earnings were $113.6 million.
Birtles says this was a "solid" result considering the state of the Australian sector, and that the company will have to turn to digital channels in the future.
"We recognise that growth in the markets in which we operate is most likely going to come from an increase in sales from digital channels rather than from the traditional physical channels," says Birtles.
"We believe this dynamic will lead to opportunities for Super Retail Group to grow its share of the physical market through delivering a better offer for our customers than our competitors and to substantially increase our share of the digital market as we invest in building our omni-retail capabilities."
The group has reported sales growth for the second half of 4.5 per cent in Auto, 2 per cent in Leisure, and 1.5 per cent in Sports for the first seven weeks.
The group is also planning on opening five new stores, close four stores, and integrate the RebelFit eight standalone stores in the second half.
Shares in Super Retail Group are down 15.57 per cent to $6.94 at 10.10am AEDT.
Business News Australia
Help us deliver quality journalism to you.
As a free and independent news site providing daily updates
during a period of unprecedented challenges for businesses everywhere
we call on your support