IC Companys sells off its mid-market segment

IC Companys announced on Thursday the impending sale of its mid-market division, which included four labels; InWear, Matinique, Part Two and Soaked in Luxury as well as the store concept Companys, to Danish fashion company DK Company for 50 million krone (5.5 million pounds) and a 10.11 percent

minority share in the company, (equal to 29 million krone).

IC Companys to focus on premium offering

IC Companys revealed plans to focus on expanding its premium segment, which included brands Tiger of Sweden, Peak Performance and By Malene Birger, due to strong growth and solid earnings witnessed over the past few years. Combined, the three brands have achieved an average revenue growth rate of 8 percent over the last three financial years and an EBIT margin of 8.2 percent for the financial year 2012/2013.

"We

wish to set the foundation for realizing to a larger extent that potential which our premium brands hold - this must be achieved by having an even more clear focus. Instead of being good at many things, we must be the best at one thing," said IC Companys Chief Executive Officer, Mads Ryder. In a press statement issued today, the company said that a number of measures had been implemented over the past two years to simplify its business and help improve earnings, including the sale of labels Jackpot and Cottonfield last year May to Danish supermarket chain Coop.

DK Company, which currently owns brands such as b.young, Casual Friday and Ichi, has acquired both brands, commercial rights and stores from IC Companys mid-market division. All current employees are set to be transferred to the new owner after the acquisition is completed, which is expected to be finalized end of June, 2014. Ryder explained that in order to continue the development of its mid-market brands, a new owner was needed.

"We have spent many resources during the past few years on developing our mid market brands which today all are strong and well-operated brands with a high brand awareness in their core markets. Despite declining revenues, we have yet accomplished to improve earnings of this business segment...however, additional investments and specialized capacity are needed in order to take the brand ambitions further." The mid-market division previously generation a combined revenue of 891 million danish krone, or 98.7 million pounds according to current exchange rates, but suffered an operating loss of 37 million krone (4.1 million pounds) for the financial year 2012/2013.

"We

consider DK Company to be a more suitable future owner of the four brands as it has its strategic focus on the Mid Market segment," added Ryder. "We firmly believe that IC Companys will achieve better future results by focusing clearly on operating fashion and sports brands in the Premium segment. This constitutes an attractive market with strong growth rates and good earnings opportunities which has also proven to be the case with particularly Tiger of Sweden and By Malene Birger during the past few years," adds Ryder.

"This marks yet another long step forward in the right direction. Having completed this divestment, we are now ready to lead IC Companys into the next stage. And as we are able to focus completely on the premium segment in the future, we consequently have the best basis for making IC Companys a success - with future growth and improved earnings."

Before the acquisition is set to be finalized, a transitional period of six to twelve months will occur, during which IC Companys will provide selected services to the mid-market business unit. IC Companys added that the agreement is "not expected to affect the Group's outlook for the financial year 2013/14, with predicted consolidated revenues from continuing operations expected to reach between 2,560 million and 2,580 million krone.