Auckland lingerie-maker Bendon out of the Naked frying pan and into the Covid fire. Photo / Supplied
Auckland lingerie-maker Bendon out of the Naked frying pan and into the Covid fire. Photo / Supplied
Struggling Auckland-based underwear-maker Bendon has improved its balance sheet since it escaped ownership of US-listed Naked, but still appears to be generating substantial losses its management largely attributes to Covid pressures in Australasia.
Bendon had been acquired by Nasdaq-listed Naked in 2017, but years of heavy losses saw the company'schief executive Anna Johnson and chairman Justin David-Rice engineer a management buyout in April 2021.
Financial statements filed to the companies office for the financial year to June 2021 report a 16 per cent growth in revenues, gross margins increasing from 39 to 54 per cent, and a bottom-line profit of $42.3m - but the latter figure is eclipsed by a $60.1m debt forgiveness package arranged as part of the buyout.
Excluding the debt forgiveness - with parent Naked paying off $14.5m owed to BNZ whose covenants had been broken and writing off $43.4m in related-party loans - suggests Bendon lost $17.7m last year, a slight improvement on the $24.6m loss the year prior.
Auditors BDO drew attention to material uncertainty over its ability to continue as a going concern - notes to the accounts flag cash outflows for the year of $12.5m, with current assets of only $9.3m - but directors Johnson and Davis-Rice expressed a belief sales could be further increased and sufficient credit facilities were in place.
Johnson told the Herald this week the buyout had triggered a range of additional costs in resetting their supply chains, along with the challenges to retail during the period in its principal markets in Australia and New Zealand.
"There are still challenges - don't get me wrong, it's not all roses and tulips - but we're resilient," she said.
"2021 was a time for transformation, not that as a wholly private business now that we need to be reporting our results, but we now have a really healthy balance sheet."
Anna Johnson, co-owner and CEO of the Bendon Group, took over the underwear-maker in 2021 and acknowledges the past year has been "challenging'. Photo / Supplied
Johnson said the past nine months had been further disrupted by the ongoing Covid crisis, including twice cancelling rebranding events at New Zealand Fashion Week, but periods of relaxed restrictions had shown strong sales at brick and mortar stores on both sides of the Tasman.
"We're not where we would have liked to have been with sales. But while we've been down in sales, our cost controls have been in line, or better, than expected."
Bendon's equity improved markedly over the period, moving from a deficit of $32.5m to $17.7m in the black. The debt-to-equity ratio now sits at just below two.
In 2017 Naked had taken on Bendon from controversial businessman Eric Watson in 2017, but only posted a series of heavy losses. Naked, whose share price has regularly skirted the delisting line on the Nasdaq, got caught up in a surge of Reddit-driven meme trading last year and since exiting Bendon has reinvented itself as an electric car company.
The company's accounts also flagged problems with the Australian Tax Office, after an Australian subsidiary's relationship with a third party to employ its staff came a cropper.
"During this period Bendon paid the third party for payroll costs including payroll tax, however it appears that the third party was not registered for payroll tax and were not lodging the payments."
