Naked Brand (NAKD) Announces Transformative Business Restructuring Plan Focused Exclusively on Accelerating Existing E-Commerce Platform

January 21, 2021 8:47 AM EST

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- Building a dominant e-commerce leader focused on the intimate apparel market, leveraging growth and synergies through M&A and investing in existing fast-growing e-commerce operations -

- Divesting unprofitable brick-and-mortar operations through the sale of Bendon subsidiary to deliver a strong balance sheet and access to capital markets to execute e-commerce growth strategy -

Naked Brand Group Limited (Nasdaq: NAKD) ("Naked" or the "Company"), a global leader in intimate apparel and swimwear, today announced that the Company plans to undertake a transformative restructuring in which it will shed its brick-and-mortar operations in order to focus exclusively on the planned rapid acceleration of its e-commerce business. Naked will seek to leverage its brand, platform and build out proprietary technology to meet the needs of consumers in today's digital world.

"Consumer trends are rapidly evolving away from brick and mortar towards online shopping, with e-commerce expected to represent 22% of global retail sales by 2023 or $6.5 trillion, according to eMarketer," said Justin Davis-Rice, Chairman of Naked. "We have experienced success with our e-commerce business and are prepared to rapidly expand our existing digital footprint as we pursue the development of a single, world-class technology platform serving the intimate apparel industry and seek to become the conduit for consolidation."

In conjunction with the strategic restructuring, Naked has signed a non-binding and non-exclusive term sheet to divest itself of its Bendon subsidiary, allowing Naked to focus on its profitable e-commerce business. The divestment of the Bendon subsidiary would be accomplished through its sale to a group composed of existing management of Naked, including Mr. Davis-Rice.

Davis-Rice continued, "In the current environment, our capital-intensive brick-and-mortar legacy business has proven challenging to sustain. This divesture will allow us to remove all group debt and transition to a pure-play, technology-rich e-commerce platform focused on intimate apparel with our existing digital business, FOH Online. FOH Online currently generates annualized revenue of approximately $20 million in the USA."

Under the proposed terms of the divestment, the management group would assume the existing liabilities of Bendon of approximately NZ$32.5 million, after repayment by Naked of Bendon's senior secured credit facility, with a cash adjustment to the purchase price based on a target inventory amount. In addition, Naked would have the right to receive future payments based on Bendon's net profits, and upon any subsequent sale of Bendon, during specified periods following the closing. Naked would provide subordinated debt financing to Bendon and Bendon would provide management services to Naked under a management services agreement. Naked intends to enter into a definitive agreement for the sale in February 2021, to seek shareholder approval for the transaction in March 2021 and to close in April 2021. However, there can be no assurance that a definitive agreement will be signed on the terms described above or at all, or if signed, that the conditions precedent will be satisfied or waived and the divestment completed.

In its pursuit to be a leading e-commerce platform in the intimate apparel market, Naked intends to make highly accretive acquisitions of existing e-commerce brands as well as develop and acquire technologies that create a better user experience for the consumer. The Company will focus on technology that it can integrate into its platform to improve the customer experience, such as body scanning and artificial intelligence to provide a best-in-class personalized shopping experience.

"Following the divestment of Bendon, we will be able provide growth capital to operations and recognize operational synergies across our acquired businesses through our technology. We will invest in next generation shopping tools that will enable our customers to discover and select the best apparel options. Taken together, we are excited to be embarking on this transformation of our business and believe our shareholders will better appreciate the long-term value and growth potential that it facilitates. I look forward to providing more updates as we move forward into 2021," concluded Davis-Rice.

For additional information, please refer to the Report of Foreign Private Issuer on Form 6-K filed by Naked with the Securities Exchange Commission on January 21, 2021.

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