Upmarket accessories and clothing retailer OrotonGroup has acquired a 30 per cent stake in lifestyle accessories brand the The Daily Edited for $4.5 million in cash and shares.
The investment, first flagged in Street Talk in December, increases OrotonGroup's exposure to one of the most powerful themes in retail - personalisation - and comes a year after Oroton started offering monogramming a selection of Oroton handbags, wallets and laptop covers.
Launched in 2014 by former lawyers Alyce Tran and Tania Liu, The Daily Edited sells embossed and personalised women's and men's leather goods, stationery and desk accessories, including bags, pouches, clutches, wallets, phone cases, diaries and overnight bags.
The brand sells on-line, through stand-alone retail stores and through concessions at retailers such as David Jones. It has also collaborated with other upmarket labels such as New York women's fashion brand TOME.
OrotonGroup chief executive Mark newman - who is due to release the company's first-half results on Tuesday - said the investment was expected to be immediately earnings per share accretive, boosting EPS by more than 10 per cent in the first full year of 2018.
TDE's sales have grown exponentially in recent years and the company is on track to lift revenues three-fold to around $19 million in 2017.
Broaden exposure
Mr Newman said the acquisition was in line with OrotonGroup's strategy to build a portfolio of complementary, affordable luxury brands that could leverage its back office structure and shared services platform to grow sales and margins and access a broader customer and supplier network.
The acquisition also strengthen's OrotonGroup's online offering and broadens its exposure to TDE's younger market segment and dedicated customer base. TDE currently has about 40,000 active customers in its online platform and about 185,000 followers across a range of social media platforms, including Instagram, Facebook, Twitter and Pinterest.
OrotonGroup has initially acquired a 30 per cent stake for $4.5 million, comprising $2.7 million cash to be injected into TDE and $1.8 million of Oroton shares to be issued to TDE's founders.
OrotonGroup will have an opportunity to lift its stake to more than 50 per cent in the future and TDE's founders and shareholders will have rights to receive up a total of $1 million additional Oroton shares subject to the business achieving certain performance criteria.
"The relationship with TDE will provide OrotonGroup with increased flexibility to meet changing consumer tastes and better position our business for growth," said Mr Newman. "With the support of the broader OrotonGroup, we believe that TDE's operations will be significantly enhanced."
Ms Tran and Ms Liu, who each owned 50 per cent of the company, will continue to operate the business following the transaction.
"This transaction represents a significant milestone for TDE, signalling its transition from an emerging retail business to an established fashion brand and recognised destination for customised accessories," said Ms Tran.
"We are excited by the opportunity to partner with OrotonGroup and learn from and leverage its proven retail and back office capabilities and network and together grow both companies to leading positions in the industry."
The deal is expected to be completed next week.
