Naked Brand Group Ltd (NASDAQ: NAKD) has been working hard to expand its retail footprint, and has done a great job at doing so. In fact, today, the company’s brick and mortar retail footprint is about double what it was in July and the online side of the business is seeing growth as well. We believe that this robustly expanding retail footprint represents a potentially incredible opportunity for investors.
NAKD Has Greatly Expanded Retail Reach Recently
When digging into Naked Brand Group, there’s one factor that caught our attention in a big way. That’s retail reach. The truth is that the company already had a pretty strong retail footprint that was largely created the moment it merged with Bendon. However, with recent announcements, this footprint has grown dramatically and is expected to see more growth ahead. Here’s a quick recap of the company’s retail footprint growth as of late:
NAKD Seals Deal With CVS
On July 31, 2018, Naked Brand Group announced that its subsidiary, Bendon Limited, entered into a partnership with CVS Health Corp. (NYSE: CVS). According to the press release and various subsequent news reports, the agreement will bring the Heidi Klum Intimates Solutions line to more than 4,000 CVS locations in the United States. This line includes a collection of 20 products and will be carried in the cosmetics department, the department which typically sees the most foot traffic within CVS.
Before the announcement of the agreement with CVS, the brick and mortar retail footprint held by NAKD consisted of around 4,000 locations. With the addition of the Heidi Klum Intimates Solutions line in CVS stores, the company has just about doubled its brick and mortar retail footprint with this one deal.
Costco Gets Naked
On August 9, 2018, Naked Brand Group announced yet another agreement that would expand its brick and mortar retail footprint. This time, a deal was signed with Costco Australia, a subsidiary of Costco Wholesale Corporation (NASDAQ: COST).
Under the terms of the agreement, Costco Australia is in the process of launching a new test program that will bring the company’s products into 11 Costco locations around Australia. Initial product shipments were expected to be made throughout August and there has been no news of delays. Also, follow-on orders have already been planned for September and October. Should all go well with this pilot program, Naked’s relationship with Costco could expand greatly.
Retail And Outlet Store Expansion
On August 14, 2018, NAKD made yet another announcement surrounding growth in its retail footprint. This time around, the company said that it had signed a series of new leases for retail and outlet stores in Australia and New Zealand. As a result, the company plans on launching 20 new stores over the next 2 years.
In the release, Naked Brand Group said that it had confirmed three new sites in New Zealand, including Netherlands, Invercargill and Manukau. There is also one site underway in Perth, Australia that will become a new Direct Factory Outlet. The company also said that 16 more sites had been identified and are expected to be rolled out by the year 2020.
Key Online Acquisition
Finally, on September 6, 2018, NAKD announced that it entered into a non-binding letter of intent to acquire a leading U.S. online retailer of women’s apparel. The company said that combined with its existing Fredrick’s of Hollywood e-Commerce license revenue, a successful closing of this acquisition would drive e-Commerce revenues to more than $70 million in the 2019 fiscal year. The company also said that the combined e-Commerce business would generate a projected EBITDA contribution of $11.3 million.
The Opportunity Here Could Be Tremendous
Naked Brand Group is ultimately embarking on what could become a highly profitable journey. The intimate apparel industry is a massive one. In fact, it is expected that this industry will grow to $250 billion in the United States alone by 2020.
As the industry continues to grow, NAKD seems to be making all of the right moves to grab its leadership position. With the company releasing several announcements with regard to retail footprint growth, both on and off line, Naked Brands Group is poised to take advantage of the impressive expansion of the intimate apparel industry.