Greenlit hopes for more and more in Best & Less sale
Sarah Thompson and Anthony Macdonald
Mar 5, 2019 — 12.15am
Department stores are in the dog house world-wide but that hasn't stopped Greenlit Brands (formerly known as Steinhoff Asia Pacific) from sniffing out potential buyers for its general merchandise businesses, which include Harris Scarfe and Best & Less.
As reported by The Australian Financial Review last month, Greenlit Brands, which also owns furniture chains Fantastic Furniture, Freedom, Plush and Snooze, is considering selling non-retail assets and using the proceeds to reduce debt while separating from its troubled overseas parent, Steinhoff International.
It now seems that Greenlit may also be willing to part with key retail assets to make a more meaningful dent in its $500 million debt pile.
Steinhoff International, in Australia, currently owns Best & Less, Harris Scarfe, Freedom Furniture, Snooze and POCO. Pat Scala
Street Talk can reveal that Greenlit's long time adviser, Monash Private Capital, has been quietly speaking to trade players and private equity investors about their potential interest in the general merchandise division.
This appears to be a change in tack since last year, when the company was considering selling some of its household goods and furniture assets.
Analysts believed Nick Scali was pretty close to buying Freedom and Fantastic, but the sale process went quiet mid-year when Greenlit battened down the hatches and refinanced almost $500 million of debt.
According to accounts lodged with the Australian Securities and Investments Commission last month, Greenlit Brands lost $23.7 million in the year ending September, compared with a profit of $41.6 million in the previous 15-month period, after booking $55.7 million in restructuring costs.
However, underlying earnings before interest, tax, depreciation and amortisation rose 3 per cent to $101.2 million on sales of $2.03 billion. Earnings grew in all key businesses except Freedom.
Furniture and household goods are out of favour at the moment as the housing market declines.
But Greenlit seems to be taking the view that the housing market will eventually recover whereas the department store sector is likely to remain under pressure for the foreseeable future. David Jones' recent results and Myer's first-half results, due on Wednesday, are likely to cement that view.
Exiting department stores to focus on household goods may also increase Greenlit's appeal to investors if it decides to dust off plans for an IPO.
Greenlit declined to comment.
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