In what could be the Nasdaq stock exchange event of the year, a host of world-famous brands are set to come under one corporate umbrella in a merger of two huge international corporations.
The merger will feature retail-brand powerhouses such as Heidi Klum, Stella McCartney, and Dwayne Wade. The three alone have more than 16 million Twitter followers and tens of millions of Facebook, and Instagram followers.
Frederick’s of Hollywood is also part of the deal. Megan Fox, with her 1.35 million Twitter followers has been touting its line.
In all, these celebrities are legendary for moving markets and driving massive the sales of their world-class brands.
But, there’s more than massive international buzz going on here.
Because of that, investors need to keep their eyes on Naked Brand Group (Nasdaq: NAKD), because its merger with the Bendon Group looks destined to consolidate, under one umbrella, much of what is now a fractured $82 billon global apparel and lingerie market.
Here’s what’s going on:
NAKD Tripled Its Profits In 2017
With soaring revenue and a year-on-year tripling of its gross profit, Naked Brand (Nasdaq: NAKD) has hit its stride as a lifestyle brand. That’s all-the-more impressive when you consider that it wasn’t profitable in 2015.
Much of its rapid growth was because major international retailers, such as Saks Fifth Avenue, Bloomingdale’s Dillard’s, and Chico’s began carrying NAKD’s women’s lingerie line, and the Dwayne Wade X sleepwear and underwear line.
Moreover, Naked Brand saw its e-commerce sales more than double.
And, all its products, from lingerie, to sleepwear, swimwear were now available at the world’s largest retailer… Amazon.
The reason for that is simple… the Internet… combined with affordable shipping costs now allows respected products, like NAKD’s, to thrive.
But its days of going it alone are about to end.
NAKD’s merger with the Bendon Group will create a super company.
Merger With Bendon Will Likely
Create A Super-Dominant Company
That’s because, Bendon, with $120 million in annual sales, and NAKD will form a new public company that spans the globe. Best of all, it’s a near-perfect merger because each company brings something unique to the table.
Bendon brings a stunning array of name-brand products to the marriage, the most famous of which is the Heidi Klum brand. Klum is an international superstar. Her leisure line includes lingerie and swimwear.
Along with Klum, Bendon has a presence in 34 countries, distribution through over 4,000 shops. It also has an omni-channel platform with online, wholesale, company-owned retail stores and, outlet stores. In other words, it’s a retail powerhouse.
That comes in the form of Carole Hochman. She is, quite simply, one of the most powerful trendsetters in the world. An industry pioneer, Hochman is considered one of the single most influential women in the intimate apparel and sleepwear business.
For more than 30 years she was the driving force behind the Carole Hochman Design Group, which designed intimate apparel for the likes of Christian Dior, Oscar de la Renta, Ralph Lauren, Jockey, Donna Karan, Tommy Bahama, and Betsey Johnson.
Hochman is an expert in translating brand identity into intimate apparel and has an innate ability to identify opportunities and trends and forecast successful endeavors that the rest of the industry quickly follows.
She was one of the first designers to embrace the concept of QVC television-based home shopping, recognizing the power of a customer who has proved loyal to her from the start.
Hochman will serve on the merged company’s board of directors… and she’ll be its Chief Design Officer.
Under The Radar, Lingerie Is A Sexy Investment Sector
The intimate apparel business is driven by strong personalities, such as Carole Hochman and Leslie Wexner of L Brands (NYSE:LB). You may not have heard of Wexner, a multi-billionaire – but you’ve likely heard of L Brands’ most famous brand – Victoria’s Secret.
L Brands has treated investors tremendously well during the past nine years. It took off on a run that found it climbing from around $8 a share to more than $60 in December of 2017. That was a solid 652% gain.
The story the same was true for PVH Corp (NYSE:PVH), which among others is home to Calvin Klein, Warner, Olga, and IZOD.
Nine years ago, PVH was at $16.50. Today it trades for above $151. That’s an 815% home run.
Of course, the favorite company for intimates and leisurewear is the same as it was nine years ago. It’s Lululemon (Nasdaq:LULU).
Nine years ago, LULU’s shares traded for under $3. It was similar to the affordable price that NAKD trades for today – pre-merger. Sector investors are pouring into NAKD because they see its potential to be the next LULU.
Truth be told, they’d be thrilled if NAKD did half as well as LULU. You see, from its humble beginning LULU has grown onto a $2 billion endeavor on yoga pants and underwear.
In the past nine years its shares have been on a tear – up 2,900% from around $3 to hovering at $90.
Along with its post-merger potential to rapidly expand its global footprint, while immediately adding a $120 million to its topline, Naked Brands (Nasdaq:NAKD), shares another trait with LULU… for that matter LB and PVH.
It trades on a major stocks exchange, the Nasdaq, where it is highly visible. It’s where companies with sudden growth spurts tend to be greatly rewarded… as the charts above indicate.
- When NAKD closes its merger with Bendon, it will become a big company, with $120 million+ in annual revenues.
- Pre-merger, NAKD was already growing quickly, tripling profits in 2017 compared to 2016.
- The merger would give NAKD a huge global each with a combine 4,000 retail outlets across Europe, Australia, New Zealand, Canada, and the United States.
- The power of iconic brands under one umbrella – Heidi Klum, Dwayne Wade, Stella McCartney, Frederick’s of Hollywood, and more.
- Director of Design, Carole Hochman is an industry pioneer who created lingerie lines for world-famous brands such as Christian Dior, Oscar de la Renta, and Ralph Lauren.
- Naked Brands (Nasdaq NAKD), post-merger, would have a huge modern global sales platform with online outlets such as Amazon, and a major television presence via QVC and Home Shopping Network. The companies sell more than $13 billion of goods each year and are in an estimated 110 million homes in the U.S. alone. Wait until Heidi Klum hits TV… because QVC is set up for name brands. Dooney & Bourke once sold 10,000 handbags in less than five minutes.
- Lingerie sales are a trend that could be sustained for years because market research from IBISWorld indicates that in-store purchases are driven by teen-agers and women over 45.
- Intimates brands treat investors well. L Brands is up 652% in nine years, PVH Corp is up 815% in nine years, and Lululemon is up 2,900% in nine years.
- NAKD is in the sector’s sweetspot. Because lingerie and sleepwear segment represent the largest share of consumer demand. This segment includes chemises, babydolls, panties, pajamas, and robes, representing 50.2% of revenue in 2017. Products in this segment often carry a high price tag relative to other industry items, which contributes to these goods’ large share of revenue.
- Lulullemon once traded on the Nasdaq at a low price not dissimilar to what NAKD trades for today.
- Wild card – other than a few major companies, which NAKD will be post-merger, the lingerie/leisurewear market is fractured thanks to small players that can sell on the Internet. They don’t generate enough revenue to be takeover targets. But, at $120 million in annual sales, NAKD could turn some heads. Between a half a billion and $600 million – equal to five year’s revenue – could be a fair price to pay.
Top Comparables: Too Late To Invest In, But A Great Study
Under Armour, Inc. (UAA)
Market Cap: $6.58B
Under Armour, Inc., together with its subsidiaries, develops, markets, and distributes branded performance apparel, footwear, and accessories for men, women, and youth primarily in North America, Europe, the Middle East, Africa, the Asia-Pacific, and Latin America. The company offers its apparel in compression, fitted, and loose types to be worn in hot, cold, and in between the extremes. It also provides various footwear products, including running, basketball, cleated, slides and performance training, and outdoor footwear.
Guess’, Inc. (GES)
Market Cap: $1.23B
Guess?, Inc. designs, markets, distributes, and licenses lifestyle collections of apparel and accessories for men, women, and children. It operates through five segments: Americas Retail, Europe, Asia, Americas Wholesale, and Licensing. The company’s clothing collection includes jeans, pants, skirts, dresses, shorts, blouses, shirts, jackets, knitwear, and intimate apparel. It also grants licenses to manufacture and distribute various products that complement its apparel lines, such as eyewear, watches, handbags, footwear, kids’ and infants’ apparel, outerwear, swimwear, fragrance, jewelry, and other fashion accessories.
Ralph Lauren Corporation (RL)
Market Cap: $8.81B
Ralph Lauren Corporation designs, markets, and distributes lifestyle products worldwide. The company operates in three segments: North America, Europe, and Asia. It offers apparel, including a range of men’s, women’s, and children’s clothing; accessories, which comprise footwear, eyewear, watches, fine jewelry, hats, belts, and leather goods, such as handbags and luggage; home products consisting of bedding and bath products, furniture, fabrics and wallpapers, lightings, paints, tabletops, and giftware; and fragrances.
Turn Your Attention To NAKD This Could
Be The Perfect Merger at the Perfect Time
In all, a Naked Brands-Bendon Group merger could not happen at a better time for the industry and for people interested in the merger’s power to send Naked Brands’ (Nasdaq:NAKD) shares soaring.
Learn More About NAKD at your brokerage today!
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