Slimma anounces sale of leading brands to N Brown

INTERNET-based fashion retailer N Brown Group has announced it has acquired the Slimma and Splendour brands from Staffordshire clothing manufacturer Slimma in a deal worth £800,000.

N Brown, based in Manchester, has also agreed to acquire the intellectual property rights of the two brands and incorporate them into its portfolio.

Slimma shares soared following the announcement – up around a third.

Slimma has been struggling for some time following the downturn in the fashion retail industry and last year disposed of some of its other loss-making brands.

The sale also heralds job cuts at the firm’s Leek base as it looks to claw back revenue from the loss in assets.

Slimma is a recognised skirt and trouser brand and is already sold through N Brown subsidiaries JD Williams and Julipa. Splendour is a lingerie brand sold through the Figleaves website and also by Simply Be and Fashion World.
 
The transaction is conditional upon Slimma changing its registered name to CDU plc, for which Slimma plc is now seeking shareholder approval.
 
In a statement, Slimma said: “The board of Slimma announces that it has entered into a conditional agreement for the disposal of its Slimma and Splendour brands to JD Williams & Co Ltd for a consideration of £800,000.  The consideration is to be settled in cash on completion.”
 
In the year ended October 2, 2010, the Slimma brand contributed approximately £1.6m in sales revenue to the company with an attributable pre-tax profit of around £195,000.

During the same period, Splendour contributed approximately £0.3m in sales revenue to the company with a pre-tax loss of £650,000. The total company sales for the year were approximately £7m.
 
After the disposal the company will continue to operate the Frank Usher and Michel Ambers brands.  

“The directors believe the disposal of the brands will not materially impact on the continuing part of the business but will result in cost benefits, mainly arising from  redundancies which will need to be made as a result of the brand sale,” added the statement.
 
The disposal is conditional on Slimma changing its name CDU plc and this requires a special resolution to be passed by its shareholders. Details of the announcement have been circulated to shareholders.
 
The company is planning to stage a general meeting on February 14 where the sale and name change are expected to be ratified.

It will also discuss what steps should be taken to deal with the reduction in the company’s net assets.