Brand Collectives Volley brand will be sold to Anchorage Capital Partners

Brand Collective's Volley brand will be sold to Anchorage Capital Partners

Australian retailer Pacific Brands is to split and sell off its loss-making Brand Collective apparel and footwear business for AUD39m (US$34m).

The move comes a day after the company confirmed it was in talks on a potential sale of its Brand Collective business, but said a transaction had not been agreed.

In a statement today (18 November), Pacific Brands revealed the division's footwear and apparel categories, which include the Grosby, Julius Marlow and Volley brands as well as licensed labels Clarks, Hush Puppies, Mossimo and Superdry, will be sold to Australian private equity firm Anchorage Capital Partners.

Sports brands Dunlop and Slazenger will be offloaded to IBML, a division of Sports Direct International, which owns these brands outside Australia and New Zealand. The Everlast equipment licence from IBML to Brand Collective will be terminated.

Sport assets related to the sport business, including Everlast equipment, will be sold to Designworks, a division of Australian apparel company The PAS Group. The PAS Group will also license the Dunlop, Slazenger and Everlast brands from IBML.

Gross proceeds from the transactions will be used to reduce net debt, the company said. The carrying value of related net assets to be disposed is expected to total AUD66m at completion.

Subject to cost of disposal and completion adjustments, Pacific Brands expects to recognise a loss on sale of around AUD30m in the financial year ending 30 June 2015.

In the financial year ending 30 June, Brand Collective reported total sales of AUD204.5m and an EBIT loss of AUD22.3m.

"The sale of the Brand Collective business is consistent with our strategy to simplify and focus Pacific Brands on maximising the potential of our market leading brands such as Bonds and Sheridan," said Pacific Brands CEO David Bortolussi.

The sale, he added, represents good value to Pacific Brands shareholders for an unprofitable division. Bortolussi believes the divestments of its workwear business, which was announced earlier this year, and Brand Collective will "dramatically simplify" Pacific Brands and "significantly improve the overall quality and growth prospects of the brand portfolio".

Last month, the Australian group revealed it would consider selling more of its brands as it continues to find ways to drive a better company performance.

Click on the following link for further insight on the company's divestment plans: Pacific Brands review may drive further divestments.