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Phase Eight reveals post-sale expansion plans and plus-size brand launch

Phase Eight will embark on further store expansion following its acquisition by The Foschini Group (TFG) and will launch a standalone plus-size brand in the UK and overseas.

South Africa-based TFG last week agreed to acquire 85% of Poppy Holdco, which trades as Phase Eight, from private equity group TowerBrook at an enterprise value of £238m – representing an equity value of £159.2m after taking into account net debt and related adjustments. Following the deal, Phase Eight will continue to operate as a standalone group and will be run by the current team, with 15% of the business owned by the management.

Speaking to Drapers about the retailer’s plans for future growth, Phase Eight chief executive Ben Barnett revealed the company will launch plus-size brand Studio 8 this summer to cater for demand for fashionable clothing in larger sizes for women over 35.

He said: “We are launching a new plus-size brand called Studio 8 in August, which will cater for sizes 16 to 24 with different designs to Phase Eight but a similar price point.”

The standalone womenswear label will be sold in John Lewis and Debenhams in the UK and through a total of 40 points of sale across the UK and internationally. It won’t be sold in existing Phase Eight stores but Barnett said they would consider standalone stores in due course.

“We held a number of focus groups over the last year which showed there is a gap in the market for our premium clothing offer in sizes 16 to 24,” he said.

Phase Eight trades from 300 stores across the UK and Ireland, and more than 130 stores and concessions internationally. Barnett said the sale to TFG would boost the retailer’s store expansion plans.

“We were keen to find a partner who understood our international aspirations,” said Barnett.

“After meeting with a number of potential investors, we felt TFG would be best positioned to help us continue our very successful international rollout. The group has 17 separate retail brands with 2,200 stores spanning clothing, jewellery, accessories and homeware.”

Phase Eight’s most recent concessions include stores in Mexico and the Netherlands, while a standalone store opened at the IFC mall in Hong Kong eight weeks ago is currently performing as its highest turnover store worldwide.

Phase Eight will launch in the Bloomingdale’s flagship on 59th Street in New York on February 12 and will open a second store in Zurich, Switzerland, at the end of February. The group plans to open its first standalone store in the Middle East, where it has 19 concessions, by the end of the year through its partner Alshaya.

TFG said last week that it will consider introducing Phase Eight to its domestic South African market, to complement existing operations. It is not yet known if this move would comprise standalone stores or concessions.

Barnett added that the group continues to see a lot of potential for growth in the UK.

“We opened a flagship in Guildford and new stores at Merry Hill [Dudley] and the Trafford Centre [Manchester] shopping centres over the last few months.

He said the retailer was going from strength to strength, on the back of a successful year that saw record sales and profits.

Phase Eight reported a 15% sales increase to £141m in the full year to February 1, 2014, while earnings before interest, taxes, depreciation and administration increased 16% to £24m.

“I think our success is down to providing stylish clothing for 35- to 55-year-old women, which is a relatively under-served niche,” he said. “It isn’t as well covered as young fashion, for example.

“It’s also down to the increasing strength of the brand and the opportunities international growth has presented.”

He pointed to new developments, such as the Collection 8 range of limited edition evening dresses, which was launched in 2012 and accounted for £8m in sales last year. “It was successful in the UK, but we also got a great response in Australia and the Middle East.”

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