Key Acquisition for Naked Brand Group Inc (NASDAQ:NAKD)

Naked Brand Group Inc (NASDAQ:NAKD)

Naked Brand Group Inc (NASDAQ:NAKD) shares are up over 30% before lunch on news that it has acquired the sole owner of intimate clothing brand Frederick’s of Hollywood global online license. NAKD shares end Tuesday at $1.26 but before lunch shares had hit $1.82 on a volume figure over 18 times the daily average.

Naked Brand Group Inc (NASDAQ:NAKD)
One month daily candle-bar graph for $NAKD

Naked, Bendon, and Bendon Group Holdings Limited (“Holdco”) recently entered into a merger agreement under which both of Naked and Bendon will become wholly owned subsidiaries of Holdco, a newly formed Australian holding company.

Bendon will acquire all of the outstanding common stock of FOH in exchange for the forgiveness of debt owed by FOH to Bendon. As a result, Bendon will control FOH’s existing license to develop and sell online products under the Fredrick’s of Hollywood name. As part of the transaction, Holdco will issue to FOH shares, which would have otherwise been issued to Bendon at the time of the merger. Most of these shares will be transferred to the affiliate of Bendon which initially funded FOH. The issuance of the Holdco shares is expected to have a minimal impact on the amount of shares Naked Brand Group Inc (NASDAQ:NAKD) stockholders will have in Holdco.

Naked Brand Group Inc (NASDAQ:NAKD) sales have increased each year since 2015 when the company reported $0.6 million in sales. That number was followed by annual sales figures of $1.4 million and $1.8 million. However profit has been harder to grasp for the apparel company. In 2015, Naked Brand Group Inc (NASDAQ:NAKD) shareholders suffered a per share loss of (-$23.33). That loss narrowed in 2016 to (-$10.13), then narrowed again in 2017 to (-$1.77).

I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.

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About the author: Steve Clark is a 23-year Wall St professional with stints in M&A, risk management, and algorithm trading. Steve keeps his head in the game by looking for, and writing about, small companies that often get overlooked by the big investment firms.

Naked Brand Group Inc. (NASDAQ:NAKD) Merges With Bendon Limited To Form Iconic Brand

Naked Brand Group Inc. (NASDAQ:NAKD)

Naked Brand Group Inc. (NASDAQ:NAKD) has signed a definitive merger agreement with privately owned Bendon Limited. The two companies are to become fully owned subsidiaries of Bendon Group Holdings Limited, a newly formed holding company based in Australia.

Naked-Bendon Merger

Under the terms of the agreement, Naked Brand Group Inc. (NASDAQ:NAKD)’s shareholders are to receive 7% of the combined company upon the deal closing. The merger has already been approved by each of the board of directors of the two companies. However, Naked’s shareholders must unanimously approve the deal prior to its closing.

“We are pleased to have reached a definitive agreement with Bendon, which is the culmination of much hard work. We believe that this merger is structured to benefit our shareholders as well as the go-forward business. We look forward to closing this transaction in due course,” said Naked’s CEO, Carole Hochman

The merger is also subject to satisfaction of closing conditions as well as attaining regulatory approvals. Bendon Group Holdings shares will have to be listed on the NASDAQ or NYSE as part of the deal. The two companies expect the deal to be completed by the end of October.

Bendon’s executive chairman, Justin Davis-Rice expects the combined company to result in a powerful portfolio of iconic innerwear, sleepwear, as well as swimwear brands. The executive also expects the merger to enhance the combined company’s strength in the global industry leading to long-term growth.

Q4 Financial Results

Naked Brand Group Inc. (NASDAQ:NAKD) comes into the deal having seen its fourth quarter loss narrow to (-$2.6) million from (-$10.6) million reported the previous year. Net loss for the full year ending January 31, 2017, came in at $10.8 million down from $19.1millon for the fiscal year 2016.

Net sales in the quarter were up by 21.9%, coming in at $0.55 million compared to $0.45 million reported in Q4 2016. Full year net sales increased by 32.6% to $1.8 million compared to $1.4 million reported the previous year.

Gross margin in the quarter soared to 49.3% from $39% the same period of fiscal 2016. Naked Brand Group Inc. (NASDAQ:NAKD) has attributed the increase to enhanced production efficiencies as well as a product mix/shift benefit. Naked exited the first quarter with cash and cash equivalent of $0.9 million compared to $4.8 million as of January 31, 2016.

Naked Brand Group Inc. (NASDAQ:NAKD) ended Thursday’s trading session by dropping 15.98% and ending the day at $2.05 a share.

I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.

About the author: Monica Gray has an undergraduate degree in Accounting and an MBA – earned with Honors. She has six years of experience in the financial markets and has been a securities analyst for the past two years.