Woolworths sells EziBuy to another Australian firm

Tuesday, 27 June 2017

Woolworths found Ezibuy to be an uneasy fit with its business.

Woolworths Australia is selling its New Zealand-based EziBuy clothing business as part of a major reshuffle.

EziBuy is a Palmerston North success story and the city mayor is confident it will stay in the region.

Woolworths has sold it to Sydney-based investment firm Alceon Group for an undisclosed amount, just four years after buying the retailer for $350 million.

Spearhead Manawatu director Craig Nash said it and Smith have worked with Woolworths over the past six months to help smooth the way for the transition.

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The pair were still organising a meeting with Alceon, but neither thought the new owners were likely to make big changes straight away.

Nash, who works to attract businesses to the region, believed the new owners would undoubtedly see the Palmerston North employees as a big asset.

'[It's a] large and loyal work force in Palmerston North that has been a huge part of the businesses success over [the past 39 years].'

Smith was confident EziBuy would remain in the city for the same reasons the previous owners kept it there – low overheads and Palmerston North's position as a distribution hub.

And from the city council's perspective, Alceon, which owns similar retail brands Noni B, Queenspark and Pretty Girl Fashion Group, seemed like a good fit for the region, he said.

'They've had considerable success growing [those brands] and we hope they can do the same here, with EziBuy.'

In a statement, Woolworths, a supermarket chain operator, said it decided to offload EziBuy in the middle of last year as it began a $1 billion reorganisation. The reshuffle slashed 500 jobs and closed dozens of underperforming stores.

'Woolworths has undertaken a comprehensive sales process to ensure the right decision was made for EziBuy, with a buyer who has indicated a desire to work with the team to continue to build the business.'

EziBuy was founded by Peter and Gerard Gillespie in 1978.

Since then, it has grown from a single black-and-white A3 flier into Australasia's largest fashion and homeware store, selling about $200m worth of products every year.

But, in a strategic review prompted by July's reorganisation, Woolworths found the company did not fit well with the rest of its business.

At that time, chief executive Brad Banducci said EziBuy operated in challenging times.

EziBuy lost $15m in 2016, on sales of $163m.

Some of the challenges were driven by exchange rate changes, particularly between Australia and New Zealand, and also, between the United States dollar and the NZ dollar, he said.

EziBuy sources a lot of its product from the US.

'It's a terrific brand and great brand franchise, in particular in New Zealand.

'We've come to realise… we're not the natural owners of the business.'

EZIBUY TIMELINE

- Palmerston North brothers Peter and Gerard Gillespie started EziBuy in 1978. It began with a single A3 black and white sheet, selling women's fashion and hardware. The mailing list was compiled by using phone books.

- EziBuy expanded to Australia in 1992, opened up a homeware range, and launched its first e-commerce site in 1998.

- By 2009, EziBuy had 39 stores around the country and a turnover of more than $190 million with more than 799 staff.

- That year it bought the Max women's fashion brand, intending to launch it in the Australian market.

- By 2011, EziBuy was forced to closed a number of regional stores as it focused more on e-commerce. It kept its larger city stores in Auckland, Wellington and Christchurch.

- In September 2013, Woolworths gained Overseas Investment Office approval to buy Ezibuy for $350m. By now it was Australasia's largest fashion and homeware multi-channel store, selling more than $200 million of products annually.

- Sydney-based investment firm Alceon Group buys EziBuy from Woolworths in June 2017 for an undisclosed amount of money.