https://www.afr.com/...20190131-h1apgt
Furniture retailer Greenlit Brands is considering selling non-core assets and using the proceeds to reduce debt while separating from troubled parent Steinhoff International.
According to accounts lodged with the Australian Securities and Investments Commission on Thursday, Greenlit Brands lost $23.7 million in the 12 months 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, even though sales fell to $2.03 billion from $2.26 billion in the previous 15-month period.
Greenlit Brands, the owner of Fantastic Furniture, is considering selling non-core assets and further distancing itself from troubled parent Steinhoff International. Louie Douvis
The company, which owns furniture chains Freedom, Fantastic Furniture and Snooze and department stores Best & Less and Harris Scarfe, slashed staff costs by 9 per cent, rental expenses by 14 per cent and marketing costs by 7 per cent, while finance expenses fell $7 million to $24.5 million after the company refinanced almost $500 million of debt.
Despite tough retail conditions, earnings grew in all key businesses except Freedom, which dropped prices as part of a shift to an everyday value pricing model during the year.
Online sales across the group doubled after investments to build e-commerce capabilities, non-core assets were sold, and the company extended trademark licensing agreements after
changing its name from Steinhoff Asia Pacific to Greenlit Brands during the year.
"In 2018, we delivered a financial result and a business performance to be proud of, especially given the extraordinary circumstances we had to contend with involving our parent company," said chief executive Michael Ford.
Mr Ford, the former chief executive of The Good Guys, joined Steinhoff Asia Pacific in late 2017, shortly before Steinhoff International, the world's second-largest furniture retailer after IKEA, was embroiled in a global accounting scandal.
"Our rebranding to Greenlit Brands and the refinancing initiative that we secured in 2018 provides us with a stable base to carefully assess our existing portfolio and the future growth options for all our brands and our group as a whole," he said.
"We also continue to carefully and methodically consider various options around separation from ownership by Steinhoff International, now from a position of strength and stability."
According to the accounts, Greenlit is considering "re-purposing non retail investments" into debt retirement or retail asset investment, and looking at various options to sever itself from Steinhoff International.
The Australian company still has $324.5 million in related party loans and bank loans of $115.6 million, taking total borrowings to $493.8 million.
In September, Greenlit signed a new financing package with a syndicate of three banks — ANZ, National Australia Bank and Deutsche Bank — that included a senior facility of $256 million expiring in October 2020. The new facility replaced a $300 million, 12-month facility agreed to in February with Steinhoff's previous syndicate of six local and international banks.
Over the last 12 months Greenlit has been in talks with lenders about a management buyout, demerger and initial public offering and has explored a trade sale, with suitors including private-equity firm KKR, Harvey Norman and Nick Scali said to have shown interest.
The new corporate name suggested Greenlit was favouring an IPO. However, the company may have to review its plans given the difficult discretionary retail environment and downturn in consumer stocks.
Greenlit Brands has 640 stores in Australia and New Zealand, eight manufacturing sites in Australia, China and Vietnam, and generates annual sales of more than $2 billion, split between homewares and general merchandise.
