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RAPAPORT... Fashion jeweler Lovisa Holdings Ltd. acquired 21 retail stores in South Africa for $1.6 million (AUD 2 million), more than doubling its retail footprint, and it plans to rebrand most of the shops upon takeover on April 1. The sales transaction is subject to approval from the Reserve Bank of South Africa, which is expected without any issue, according to Lovisa Holdings. The purchased stores are currently offering a range of fashion accessories and are a similar in size to the Lovisa concept store. The company stated that the transaction also includes a deferred payment of $194,000 (AUD 250,000), payable 12 months after the sale closes. Currently, the 21-chain business has an assessed tax loss valued at approximately $659,000 (AUD 850,000), which Lovisa Holdings believed will benefit its own future trading periods, while it anticipates earnings before interest and tax from these stores of $1.4 million (AUD 1.75 million) in the upcoming fiscal year. The acquisition and refurbishment costs for the stores will be funded from loan facilities. Lovisa Holding's CEO, Shane Fallscheer, said, “We are very excited by this transaction as it quickly takes us beyond 30 stores in South Africa, positioning us as the largest fashion jewelry retailer in South Africa and giving us a national footprint of stores in what is one of our most successful markets. This places Lovisa well ahead of our growth forecasts and enables us to continue to look for opportunities in South Africa, while moving our focus to other growth markets, both company owned and franchise.” The retailer plans a rapid redesign program for the acquired stores, expecting the bulk of work to be completed within three months. Lovisa is budgeting refurbishment costs of approximately $44,000 (AUD 57,000) and inventory of $39,000 (AUD 50,000) per store. In addition, Lovisa was evaluating locations where there might crossover, so it forecasts closing five of the 21 locations within six months of the acquisition. In the most recent financial statement, Lovisa Holdings reported that revenue jumped 33.3 percent year on year to $57 million (AUD 73.3 million) in its first half that ended on December 28. Profit surged 66.2 percent to $10 million (AUD 12.3 million).
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