20th Mar 2006 07:01
Sherwood Group PLC20 March 2006 SHERWOOD GROUP PLC Acquisition of Charnos lingerie brand Sherwood Group plc ("Sherwood" or "the Group") is a designer and supplier ofladies' intimate apparel, with a portfolio of brands comprising Lepel, MissLepel, and Ted Baker Intimates Sherwood Group announces that it has purchased the brand and assets of theCharnos business from the administrators of Nelson I.A. Limited. The acquisitionwas completed on 17 March 2006 for a cash consideration of £585,000. Theacquisition is being funded out of cash resources and the consideration relatesto the purchase of the Charnos brand and its associated trademarks plus thetransfer of 44 staff. The consideration comprises goodwill, stock, and fixtures& fittings. About Charnos Charnos is a strong and recognised lingerie brand with over 50 years of heritageand is distributed to over 500 customers I n the UK. The business had sales of£4.3 million in the 12-month period to 31 December 2005 (Source: Unauditedmanagement accounts from Nelson I.A. Limited). Nelson I.A. Limited acquired theCharnos brand in 2002 for a goodwill consideration of £1million from CharnosPlc. General Manager, Shaeren McKenzie, who will be transferring with thebusiness will join the operating garment board of Sherwood Group, bringing withher extensive experience and sound managerial skills. Charnos was voted 'Best Sexy Lingerie' in the Figleaves.com awards 2005. Rationale for Acquisition Sherwood Group is focused on becoming the leading provider of branded solutionsin the intimate apparel sector. The acquisition of the Charnos business acts asa perfect complement to the existing portfolio of brands and provides access toa greater number of independent retailers where Charnos has a higher penetrationthan current Sherwood brands. Charnos is positioned amongst the aspirationalbrands within the lingerie market and will broaden the reach of Sherwood brands.The brand fits well with Sherwood's other brands - Lepel, Ted Baker, DiscoverMademoiselle, Miss Lepel and the newly launched Urban Nights. The Charnos business will continue to have dedicated resource focused on design,marketing, sales and brand account administration, but economies of scale willbe achieved by consolidating the existing, sourcing and merchandising teams withother brands in Sherwood, putting all logistics and distribution through theSherwood facility together with centralising financial accounting. Over time,systems will be integrated to further improve performance. The integration ofthe two operations will take place over the next six weeks. Financial Impact The cash consideration of £585,000 is funded out of available cash reserves andan additional £250,000 has been provided for to complete the re-structuring andintegration of the business. The current Charnos brand made an operating profitof approximately £0.1million during its last financial year to December 2005(source unaudited management accounts Nelson I.A. Limited) Sherwood believes that sales achieved through the unwinding of the stockpurchased will cover the initial acquisition cost. The administration of NelsonI.A. Limited has affected customer and supplier confidence and may have a directimpact on this current year's performance. However, there is confidence inreturning Charnos to normalised profit through improved sales, margin andoperating costs. Michael Hobbs, Sherwood Group Chairman, comments, "This is a major step forward for the Sherwood Group and demonstrates theambition and confidence of its management team. Charnos complements Sherwood'scurrent stable of brands. Its market position and strong distribution throughthe independent sector helps broaden the opportunity for all Sherwood brands." 20 March 2006 ENQUIRIES: Sherwood Group plc Tel: 0115 946 1070Michael Hobbs, ChairmanCarol Duncumb, Chief ExecutiveLaurence Ford, Finance Director KBC Peel Hunt Tel: 020 7418 8900Matt Goode College Hill Tel: 020 7457 2020Gareth David This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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