Underwear maker Bendon, owned by NBR Rich Lister Eric Watson, has disclosed mounting losses related to tax adjustments as a proposed merger with Nasdaq-listed Naked Brand Group draws nearer.
Bendon had previously disclosed 2016 sales of about US$100 million (NZ$137m) in documents relating to the tie-up with the unprofitable Naked Brand. However, Naked Brand's first-quarter report included more detailed information about the New Zealand firm's earnings, showing Bendon's net sales rose 8.7 per cent to US$105.7m in the year ended June 30, 2016, on improved selling conditions across all channels, although its bottom line deteriorated by US$6.2m with a wider net loss of US$16.3m, largely as a result of a US$4.2m write-off of prior year tax losses and one-time deferred tax adjustments.
Naked Brand, meanwhile, reported a 1.7 per cent increase in net sales in the three months ended April 30 to US$460,000. However, its net loss for the first quarter of its 2018 financial year was US$3.2m versus a net loss of US$2.5m a year earlier.
Early this year Watson announced plans to merge Bendon with New York-based Naked Brand in what will effectively be a reverse takeover, with the New Zealand-based manufacturer's shareholders set to end up owning 94 per cent of the enlarged entity.
At the time, the companies touted benefits of a merger as including Bendon's immediate access to US capital markets, Naked Brand's ability to leverage Bendon's distribution channels, and the elimination of duplicated supply chain and administrative costs.
