Severe trading restrictions in response to Covid-19 are exacerbating the need for Bendon to raise funds. Photo / Supplied
Severe trading restrictions in response to Covid-19 are exacerbating the need for Bendon to raise funds. Photo / Supplied
Bendon's financial position has deteriorated with the lingerie retailer's parent company needing to raise further capital for the business to continue as a going concern.
Nasdaq-listed Naked Brand Group has just filed its annual report showing an after-tax loss of US$54.3 million (NZ$88m) for the year to January 31 onrevenue of US$90m, down from US$112m the previous year.
The company reported a working capital deficit of US$22m and negative shareholders' equity of US$6.3m. Total borrowings at balance date amounted to US$88m.
Severe trading restrictions in response to Covid-19 are exacerbating the need for further financing.
Bendon parent company Naked Brands has terminated an agreement to sell Heidi Klum branded products. Photo / Supplied
The company is negotiating with BNZ over loan repayment dates and has applied for $2m in wage subsidies from the New Zealand Government for its 338 local employees.
Naked's annual report says while the directors are confident of meeting its debt obligations, the going concern of the business is dependent on several factors, including raising at least NZ$6.8m before October, increasing sales margins and maintaining key personnel.
Naked last year raised NZ$34m from share issues and convertible notes to assist with cashflow and repay debt and Bendon chief executive Anna Johnson said the business was on track to raise the remaining required funding.
"We don't anticipate for this to change," Johnson told the Herald.
She noted that US regulators had extended temporary relief to all Nasdaq-listed companies so they were not required to meet minimum bid pricing of $1 for 10 consecutive days until November.
Otherwise, under normal listing rules, Naked faced being delisted due to its lower stock price. The shares recently traded at 63c.
In early March Naked reached an agreement with BNZ to extend and restate a $16.7m revolving loan facility until March 2022. Management noted that while the business was compliant with its financial covenants in January and February, it is unlikely to remain so under the restated facility due to the impact of Covid-19.
"We are currently in negotiations with BNZ to revise these temporarily," Naked's annual report stated.
The company has also terminated a licence agreement with Heidi Klum branded products having previously jettisoned the Stella McCartney brand and is now focused on Bendon, Pleasure State, Fayreform and Frederick's of Hollywood.
Johnson said the company continued to enjoy a very supportive relationship with the BNZ.
"With the help of the government funding from all three countries we trade in, the support of our staff and the leadership and experience of our executive team, we are well placed to return back to our customers at Level 2," she said, referring to the New Zealand Government's decision this week to allow retail outlets to reopen their businesses.
Naked's losses in the year ended January 31 were impacted by inventory levels and reduced turnover in both outlet and retail stores in New Zealand and Australia, the company said.
Bendon was once majority-owned by embattled businessman Eric Watson before its backdoor listing following a reverse merger with Naked in 2017.
The majority of its retail stores are in New Zealand, with most of its revenue generated here.
The outbreak of Covid-19 had resulted in bricks and mortar stores temporarily closing; however, the company had continued to trade through two online stores.
The pandemic had also delayed stock flow due to factory closures in Asia but that inventory flow has now resumed, enabling the company to fulfil online orders from its New Zealand and US warehouses.
In Australia and New Zealand, the company also sells items through department stores such as Myer, Farmers and David Jones.
