Truworths buys Earthchild Clothing
Truworths International, a South African clothing retailer, plans to boost its offering to children after completing the purchase of Earthchild Clothing for an undisclosed cash sum. The proposed acquisition of the owner of the Earthchild and Earthaddict brands will add a network of 43 stores to Truworths’ 600 outlets across South Africa, the Cape Town-based company said today in a statement.
The deal is conditional on due diligence and other regulatory approvals. “We are committed to providing the necessary financial and other resources to increase the number of Earthchild and Earthaddict stores relatively rapidly, introduce a credit facility for customers, and grow the operations beyond South Africa,” Truworths chief executive Michael Mark said in the statement. The brands “reinforce our growth prospects” in childrenswear, he said. Truworths, which also sells jewellry and mobile phones, had 1.59 billion rand in cash as of June 29, up 20 percent from a year earlier. The retailer last made an acquisition in 2006, when it bought a controlling stake in South African fashion retailer Uzzi for an undisclosed amount. While the company has looked at buying a number of other businesses since then, the owners demanded a higher price than Truworths was willing to pay, Mark said in 2012. South African retailers have been struggling this year as rising inflation and unemployment of more than 25 percent hurts consumer spending.
Truworths shares climbed 2.5 percent to 72.50 rand as of 11:59 am in Johannesburg, paring the 2014 decline to 5.6 percent. Earthchild, founded in 1994, sells children and womens’ clothing made from organic fabrics. The effective date of the acquisition is expected to be in the first quarter of 2015, Truworths said. Earthchild chief executive Jonathan Katz will continue in his current role for at least three years as part of an earn-out agreement. Source: IOL