Turnaround specialists Anchorage Capital pick up Elwood retail brand

Fashion brand Elwood is set for a makeover, with private equity outfit Anchorage Capital in the final stages of securing a deal to purchase the brand and its sister label Elka Collective.

Anchorage has a reputation for rapidly turning around struggling businesses, having played an instrumental part in the reversal of fortunes at electronics retailer Dick Smith.

Fairfax reports the deal between Anchorage Capital and Elwood owners Peter and David Vial will be finalised next week, although the price of the acquisition is undisclosed.

Elwood and Elka Collective, which together have four bricks-and-mortar outlets, will join the Brand Collective stable, which Anchorage purchased from Pacific Brands in November 2014 as part of a $39 million deal.

Brand Collective now includes fashion brands Sachi, Mossimo and Volley, as well as another recent Anchorage acquisition, shoe retailer Shoes & Sox.

Similar to other Anchorage targets, Elwood’s performance has been underwhelming in recent years, with sales reportedly tumbling from around $20 million annually to less than $8 million this year.

Martin Matthews, chief executive of Brand Collective, told Fairfax he plans to revive the brand and is aiming to achieve $10 million in sales within five years.

“Elwood is fundamentally a lifestyle brand and that’s its core heritage rather than what they [previous owners] attempted to do, which was to turn it into a contemporary men’s fashion label,” Matthews said.

Brand Collective plans to build on Elwood’s existing range of stockists, which includes Myer, and will continue to operate the brand’s four retail outlets.

Three of the stores are outlet shops, while the fourth, Windsor Annex, is located on Chapel Street in Melbourne.

Matthews also plans to take advantage of the digital capabilities of the rest of the Brand Collective group.

“We have fairly advanced online capabilities, which we will be able to leverage into the Elwood business,” he says.

“And we will explore other retail concepts down the line … the Windsor Annex we plan to make into a flagship for Elka.”

It’s likely Elwood won’t be the last brand snapped up by Brand Collective, with Matthews saying further acquisitions are firmly on the table.

“It’s a good time to be buying retail businesses … there are a lot of weak players out there, operators that are struggling with sourcing particularly with the weakening Australian dollar,” he said.

Brian Walker, chief executive of the Retail Doctor Group, told SmartCompany it appears Brand Collective is “really building on becoming an omni-channel retailer by securing as many aspects of the supply chain and customer experience under its own roof”.

However, Walker says a brand like Elwood “would be very small fry” for a private equity firm like Anchorage and says the acquisition therefore suggests the new owner will likely ramp up the distribution of the brand quickly.

Walker says the danger is “not to create another mid-market retail experience”.

“There’s plenty of that our there already,” he says.