Bendon posts wider loss despite better sales

Bendon posts wider loss despite better sales as Naked merger nears

By Rebecca Howard

June 26 (BusinessDesk) - Underwear maker Bendon, owned by NBR Rich Lister Eric Watson, has disclosed mounting losses related to tax adjustments as a proposed merger with Nasdaq-listed Naked Brand Group draws nearer.

Bendon had previously disclosed 2016 sales of about US$100 million in documents relating to the tie-up with the unprofitable Naked Brand. However, Naked Brand's first-quarter report included more detailed information about the New Zealand firm's earnings, showing Bendon’s net sales rose 8.7 percent to US$105.7 million in the year ended June 30, 2016, on improved selling conditions across all channels, although its bottom line deteriorated by US$6.2 million with a wider net loss of US$16.3 million, largely as a result of a US$4.2 million write-off of prior year tax losses and one-time deferred tax adjustments.

Naked Brand, meanwhile, reported a 1.7 percent increase in net sales in the three months ended April 30 to US$460,000. However, its net loss for the first quarter of its 2018 financial year was US$3.2 million versus a net loss of US$2.5 million a year earlier.

Early this year Watson announced plans to merge Bendon with New York-based Naked Brand in what will effectively be a reverse takeover, with the New Zealand-based manufacturer's shareholders set to end up owning 94 percent of the enlarged entity.

At the time, the companies touted benefits of a merger as including Bendon's immediate access to US capital markets, Naked Brand's ability to leverage Bendon's distribution channels, and the elimination of duplicated supply chain and administrative costs.

Under the agreement, Naked Brand and Bendon will become wholly owned units of Bendon Group Holdings, a newly formed, Australian holding company and the shareholders of Bendon and stockholders of Naked Brand will become the shareholders of that holding company, which will be listed on either the Nasdaq or the New York Stock Exchange.

In its latest filing to the US Securities and Exchange Commission, Naked Brand said the merger agreement remains subject to approval by Naked’s stockholders and other customary closing conditions and regulatory approvals. It expects the process to be completed by the end of October 2017.

Naked Brand shares last traded at US$1.50, and have climbed 50 percent so far this year.

(BusinessDesk)

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