“White stuff” might have all sorts of stimulating connotations. But whether the latest offshore acquisition by TFG is the right stuff to put a pep into the fashion retailer’s step remains to seen.
Last week TFG announced it was expanding further in the UK fashion market with the purchase of White Stuff — injecting a dose of the casual lifestyle category into its range of more formal apparel in the UK, which is dominated by smart womenswear.
The group bought Phase Eight — an occasion-wear brand — in 2015 and later acquired Whistles (high fashion) and Hobbs (smart occasion wear).
TFG CEO Anthony Thunström says TFG London will now be in a position to create a unified retail platform in the UK, which would mirror the group’s structure in Africa and Australia. TFG has 35 brands in 23 countries.
“We don’t have anything casual in our portfolio in London at the moment. And like all categories in fashion, they go through cycles … So from a diversification perspective for our UK business we felt it was important to add casual lifestyle as a category.
“White Stuff also has a very promising menswear component and kidswear as well … Neither of which was covered in our existing portfolio.”
From a diversification perspective for our UK business we felt it was important to add casual lifestyle as a category
— Anthony Thunström
Shane Watkins, chief investment officer at All Weather Capital, points out that the earnings before interest and tax margins of White Stuff are very low at about 5% vs the margins on the existing UK business of more than 10%. “So, there must be significant synergies expected or the transaction would not make sense. TFG has not been that successful in the UK, certainly not when compared to its success in Australia, and I think investors will be unexcited by this transaction.”
Watkins says the South African economy is expected to accelerate and TFG should perhaps have focused on the domestic market.
TFG has been looking for acquisitions in the casual lifestyle sector for some time, including brands such as FatFace (bought by Next in October 2023), Seasalt Cornwall and Weird Fish.
“White Stuff then came on the market fairly recently,” Thunström says. “There were a number of potential buyers and we were very pleased that we were able to quickly convince the management team and the owners that TFG London would be the best home for [it].”
Thunström says White Stuff will boost TFG London’s turnover by about 50%.
“We have a very capable and experienced UK management team running our TFG London business. During Covid, they consolidated many of the back-office processes between the three brands and are in the process of creating a retail platform business along the lines of what we already have in TFG Africa and TFG Australia.”
Thunström says TFG is at a stage where it is adding brands — particularly those such as White Stuff with clear growth potential — onto its retail platform. “We know how to plug new brands into our retail platform, as we have recently demonstrated with the successful acquisitions and integration of Jet and the four Tapestry brands — Coricraft, Volpes Linen, Dial-a-Bed and the Bed Store.
TFG has not been that successful in the UK, certainly not when compared to its success in Australia, and I think investors will be unexcited by this transaction
— Shane Watkins,
“They can quickly leverage off our central infrastructure. So yes, we do continue to look for the right kind of opportunities that suit our portfolio across all three of the regions we trade in.”
The value of the White Stuff transaction was not disclosed — which means that it must be less than 5% of TFG’s R49.5bn market value. But the UK’s PA Media reported that TFG was paying about £50m.
The deal will be funded from TFG’s recently refinanced debt facility.
TFG plans to expand White Stuff’s portfolio of shops and concessions after positive recent growth for the brand. White Stuff was founded in 1985 and has 113 stores and 46 concessions in the UK, with another six stores and 25 concessions across Europe.
White Stuff has been founder-owned since its inception. But Thunström believes TFG can add significant value to the business. “We have never been afraid to invest significant capital in rolling out further standalone stores, we’ve looked at where a lot of the other players in that casual lifestyle sector have successful stores in the UK and we’ve got a pretty good road map in terms of where there are opportunities to open further White Stuff stores.”
He adds that TFG also has a successful e-commerce platform in the UK. “We believe White Stuff will benefit from that exposure and exposure to our broader customer base in the UK as well.” Online sales currently contribute 43% of White Stuff’s total sales.
White Stuff’s founders, George Treves and Sean Thomas, will step down from the board and leave the business. Treves told PA Media the company’s sale to TFG is “significant and emotional” for him and Thomas. “We have spent over 40 years building this company from the ground up.”
Jo Jenkins, the CEO of White Stuff, said TFG’s acquisition represents the natural next step for the business. “It builds on the hard work and success the brand has achieved in recent years.”
TFG said White Stuff has a solid record of results. In the year to end-April it achieved revenue of £154.8m and earnings before interest, taxes, depreciation and amortisation of £8.6m.
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