Fantastic Furniture revisits ASX registration plans
Mr Ford, who ran consumer electronics and home appliance chain The Good Guys for 10 years before it was acquired by JB Hi-Fi for $870 million, said the group was monitoring the activity levels of consumers as the omicron wave of COVID-19 began to level off in the larger states.
He considered an initial public offering of the Fantastic Furniture business in late 2020, but decided against it due to COVID-19-related disruptions. Steinhoff International continues to struggle with heavy levels of debt in its global operations.
Signs of optimism
If consumer confidence shows signs of starting to improve after falling to 30-year lows a few weeks ago, IPO plans could be stepped up for Fantastic Furniture, which has 82 outlets.
“We will be looking at the fate of the business, whether through an IPO or commercial sale, in the weeks ahead,” Ford said.
He said there had been improving signs of optimism over the past week with more people ready to return to brick and mortar stores, although it was difficult to predict what would happen. with consumer sentiment or the direction of the pandemic.
“The best source of information for us is our store managers,” he said.
Fantastic Furniture, launched on the value end of the market, generates more than 30% of its sales from online channels, and that rose to 50-60% during the height of COVID-19 lockdowns last year in Sydney and Melbourne.
“If you want to be relevant in the next decade, you’ll have to embrace a digital-first strategy,” Ford said.
He said the group’s inventory levels were roughly “expected” despite supply chain disruptions and rising shipping costs, which were affecting everyone in the industry.
Mr. Ford expressed frustration that Fantastic Furniture had “too little” inventory in the extremely strong home office category.
“It’s a typical retail dilemma,” he said.
The Greenlit Brands stable, which included five months of trading for Fantastic Furniture before its restructuring into a separate entity, generated total revenue of $1.3 billion for the 12 months ended October 3, 2021. That was 8, 6% more than a year earlier despite prolonged lockdowns in Sydney, Melbourne and New Zealand.
Greenlit Brands normalized pretax profit was $47.4 million for the 12 months ended October 3, up 35% from 2020. For the seven months ended October 3, the entity FF Holdco, which is the Fantastic Furniture business, had revenue of $330 million. and net income after tax of $9.5 million.
Analysts suspect Fantastic Furniture to be valued between $450 million and $700 million.
In October, Greenlit Brands sold midrange sofa chain Plush to Nick Scali Furniture for $103 million. Plush had 46 stores. She was able to pay $170 million in dividends to Steinhoff after this sale.
The Greenlit Brands entity was created in 2018 to own the Australian and New Zealand domestic retail brands and manufacturing operations of Steinhoff International, after parent company Steinhoff became embroiled in an offshore financial scandal involving accounting irregularities. It was not related to the Australian operations.
Greenlit Brands has already sold Best & Less and Harris Scarfe, which were bought by Australian buyout firm Allegro Funds.
Aaron Canning, COO of Greenlit Brands, said the Fantastic Furniture business is in great shape and is on track to launch on the ASX in late 2020. “We have five minutes to midnight,” said he declared.
Mr Canning joined Greenlit Brands in early 2020 and was previously Chief Financial Officer of Blackmores Vitamin Group.