Accent (ASX:AX1) share price on watch after announcing Glue acquisition

The Accent Group Ltd (ASX: AX1) share price will be on watch after announcing a major new acquisition this morning…

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The Accent Group Ltd (ASX: AX1) share price will be one to watch on Friday.

This follows news that the footwear-focused retailer is adding to its collection of store brands with a new acquisition.

What is Accent acquiring?

This morning Accent confirmed reports that it has signed an agreement to acquire the Glue Store retail business and the wholesale and distribution brands business of Next Athleisure for a cash consideration of $13 million.

Glue Store is a leading Australian youth apparel, shoe and accessory retailer offering a range spanning global street, fashion, and sport cultures.

According to the release, Glue Store operates a network of 21 stores and an integrated online site, with around 500,000 loyalty program members. It currently generates annual sales of approximately $90 million, including $16.6 million of online sales.

As part of the acquisition, Accent revealed that it will acquire all of Next Athleisure’s exclusive owned vertical brands. This includes Nude Lucy, Beyond Her, Lulu & Rosem and Article One, which collectively drive more than 25% of total sales.

Next Athleisure also has distribution rights for a strong portfolio of global brands, including Superga, Ellesse, le coq sportif, Kappa, K-Way, Sebago and Napapijri. These rights will be transferred to Accent, subject to usual brand owner consent. 

Management advised that the Next Athleisure business will become a new division within Accent named Accent Lifestyle. The  current CEO of Next Athleisure, Darren Todd, will join Accent as the Group General Manager of Accent Lifestyle.

The acquisition is expected to complete in May. But due to its timing, it is not expected to have a material impact on Accent’s FY 2021 financial performance.

“Perfectly aligned”

Accent’s CEO, Daniel Agostinelli, commented “The NAL acquisition is perfectly aligned to our strategy to grow our leadership position in the lifestyle and youth apparel market in Australia and New Zealand. Glue Store, along with the NAL wholesale and distribution business, provides an established and complementary platform to accelerate our growing apparel business. It also comes with several exciting vertical owned brands, including Nude Lucy and Beyond Her, and a strong portfolio of global distributed brands.”

“We see significant opportunity to leverage Accent’s retail expertise to improve the Glue Store customer experience and store profitability. The youth apparel market is highly fragmented with significant opportunity to grow the store network and capture market share over time,” he added.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Accent Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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