Retail

Three ways Noni B turned things around to supercharge profits

Emma Koehn /

Womenswear retailer Noni B bucked the trend of dire retail stories this week, announcing it had increased its half-year net profit after tax by 379.5% compared to the same period last year, resulting in the company coming out ahead by $11.8 million over the past six months.

It may be a tough time for those in the women’s clothing market, but the company’s chairman Richard Facioni told shareholders yesterday the result showed a “successful execution” of long-term growth strategies.

Noni B traces its origins back to the 1960s when it was founded by Noni Broadbent. It’s path back to solid profitability has been a multi-stage process over a number of years, however, after the business faced losses in 2014, when investment firm Alceon took a 40% stake in the business and started a path toward turnaround.

This week, the company outlined three key secrets to its success, with each of these building up over a longer period of years, rather than being quick wins.

However, executive director of Kepler Analytics, David Gordon, says while this week’s results can be celebrated “for doing the simple things right”, it will take years until it’s clear whether the company’s approach, including bringing a suite of new brands into its stable, worked.

“The effectiveness of the strategy just won’t be proved until they’ve gone through a number of seasons,” he says.

1. The acquisition

The Noni B group posted a 35% increase in revenue over the past six months, bringing in $193 million to December 31. Part of the reason for this accelerated growth is the numbers from its acquisition of the Pretty Girl stable of retail brands are finally showing up on the balance sheet.

In 2016, bought Pretty Girl, a company of retail holdings then owned by James Packer, for $75 million. This added the Rockmans, Table Eight, W. Lane and beme brands to the Noni B stable, which the company said in its 2017 annual report also gave it the ability to engage with the millions of loyalty members across those brands.

The brands were acquired in August 2016, and in Noni B’s first half results for the 2017 financial year, the company indicated sales from the new brands contributed to a 142% increase in revenue, which came in at $143 million between June and December of 2016.

Reflecting on the purchase this week, Facioni said the numbers show this acquisition is paying off big time, “as evidenced by our continued like-for-like sales growth”.

David Gordon says the acquisition strategy is one many retailers have taken up in the past, but care has to be taken with brands if this is to be done well.

If done correctly, it can be a very effective strategy, but as long as each brand remains with its own position and culture,” he says. 

This challenge could be complicated for Noni B in the long run, Gordon says, because each brand must have its own identity when facing consumers, but from inside the company, the brands need to use similar supply chain processes.

2. The online strategy

Noni B’s online sales are also closing in on delivering 5% of the company’s revenue, a milestone which represents a 68% increase when compared with this time period last year.

The company, which operates 642 bricks-and-mortar-stores, has made a commitment to growing its online sales base over the longer term. In 2017, it highlighted a range of investments it had made on this front, including appointing a general manager exclusively for online sales.

In a 2017 presentation to shareholders, the company said it was delivering more than 80,000 orders to customers a year and had also increased its online customer base by 75% between 2016 and 2017. 

Gordon says the focus on rapid online sales growth also makes sense, but it will be up to the team managing those sales to target the right individual brand segments on social media.

“The challenge to that particularly general manager [of online retail] will be to ensure that they coordinate all of the brands. That person is essentially a marketer, not a designer or even a brand specialist — they should be an online marketing specialist, using social media and other marketing activities to corral people into the Noni B sites.” 

3. The store footprint

At a time when other retailers are downsizing, the Noni B brands have actually expanded their store footprints. At the company’s annual general meeting last November, the company informed shareholders it had committed to a net increase of 28 stores over a six-month period.

Managing director and chief executive of Noni B, Scott Evans, told shareholders in a statement yesterday the company sees “opportunity for further growth” on this front.

The expanded store network comes after the business engaged in plans over the past two years to overhaul the layout and design of all stores, including the sites of the new brands it acquired in 2016.

According to the company’s 2017 AGM presentation, the aim was to create “emotionally engaging” visual merchandise that would bring more shoppers into stores.

With this approach in mind, the business says it will continue to potentially invest in even more new-look stores, but as Evans told investors yesterday, this would be “subject to achieving appropriate commercial terms”.

NOW READ: Kmart chief says the retailer is “failing” customers and will only reach sales targets if the team remains “dissatisfied”

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Emma Koehn

Emma Koehn is SmartCompany's senior journalist.

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