Published: 25 March 2005
Rebel Sport owner Briscoe Group Ltd has signed a conditional agreement to take the franchising business for the Stirling Sports chain of sports goods stores off Mark Taylor’s Stirling Sports Franchises Ltd & Franchise Investments Ltd (in receivership since December).
Franchise Investments licensed the intellectual property rights in the Stirling Sports brand to Stirling Sports Franchises Ltd.
Receivership of The Building Depot chain of hardware stores last September brought about the collapse of RetailX Ltd, the franchising-based listed company which Mr Taylor headed.
RetailX is now in the throes of a reverse takeover. The separate Briscoe takeover of the Stirling Sports franchising business was raised last November.
Duke still needs Stirling shopkeepers’ support
Briscoe Group managing director Rod Duke said the agreement signed on Thursday was conditional on vendor shareholder approvals and commitments from a significant number of the existing Stirling Sports franchises to enter into a new form of franchise agreement.He said it was expected to take up to 2 months to satisfy those conditions.
Under the terms agreed, the consideration won’t be disclosed until the sale & purchase agreement becomes unconditional. Briscoe Group intends to pay cash for the business.The 32-store Stirling Sports chain generated $40 million of sales for the July 2004 year. At its peak, the chain had more than 50 stores & sales exceeding $50 million.Mr Duke said the Rebel Sport chain had been a clear leader in the sporting goods market since the late 90s and generated more than $100 million of sales/year from its network of 20 stores.”We believe we can make significant contributions to the success of the Stirling Sports franchises by utilising our existing strengths in a variety of areas. These include media arrangements, product sourcing, financial system, property management, human resources & loss prevention.
“Feedback to date from Stirling Sports franchisees has been constructive. We believe there is a high level of recognition of the potential benefits and we would expect this to translate into a high level of support for our involvement,” Mr Duke said. “The transaction also enables us to make a quantum leap forward in implementing our recently announced franchise network plans, to achieve market coverage beyond the major metropolitan areas. We see this as a significant ‘win/win’ opportunity for Stirling Sports franchisees & Briscoe Group, as well as for all the customers of both chains.”Mr Duke said Briscoe Group intended to maintain the Stirling Sports network under its own separate brand. “We see potential for further growth for Stirling Sports in areas that are not already serviced.
“Stirling Sports is well known and fits well as a smaller-format partner alongside Rebel Sport in the sporting goods market. In our dealings with the Stirling Sports franchisees we have been impressed with their enthusiasm & loyalty to the brand, and we regard that as a positive for the future.”
Briscoe annual result weakens
Although it’s Briscoe that’s undertaking the takeover, its own financial position weakened in the year to 31 January.
On 17 March, Briscoe announced a 19% fall in pretax profit, to $29.1 million, on revenue up 1% to $320.6 million, and a bottomline profit down 20.7% to $18.7 million.
Ebit fell 21.2% to $34.7 million. Earnings/share fell from 11.2c to 8.9c.
The company said its gross profit rose by 5.7% to $106.2 million, and the gross profit margin rose from 31.9% to 33.4%.
Mr Duke said the 0.92% sales increase wasn’t enough to cover increases in operating costs, ibncuding those associated with opening 6 new stores.
Same-store, Briscoes Homeware sales fell 4.8% and Rebel Sport fell 10.6%.
8 March 2005: Reverse takeover for RetailX
20 January 2005: Brett Wilkinson props up RetailX
19 December 2004: Briscoe warns of hefty 2nd-half profit cut
2 December 2004: RetailX reports loss as talks on future continue
1 November 2004: Briscoe aims at Stirling Sports takeover
4 October 2004: Retail Services to be wound up, RetailX to stay listed & be sold
14 September 2004: RetailX trading suspension over, but future still fuzzy
Website: Briscoe Group