Project Description
START
Best & Less Group (BLG) is a leading value apparel specialty retailer with an omnichannel sales network comprising 248 physical stores and an online platform across its two trusted brands: Best & Less (in Australia) and Postie (in New Zealand). Allegro acquired BLG in 2019 through its purchase of Greenlit Brands General Merchandise (GBGM), a complex corporate carveout of four retail brands – Best & Less, Postie, Harris Scarfe, and Debenhams – from the Steinhoff Group (Steinhoff). BLG was the fifth investment in Allegro Fund III.
The investment was a proprietary deal which involved Allegro partnering with Jason Murray, the former Managing Director of Pepkor SEA, which was a group that encompassed GBGM, to provide a solution for Steinhoff. The deal was highly complex: Steinhoff had deemed GBGM to be a non-core asset, there were multiple stakeholders in the transaction with differing priorities, and the GBGM brands were underperforming and facing into retail sector headwinds. Given these challenges, Steinhoff wanted a solution that provided a clean, 100% sale of GBGM, and a partner that could act with speed and certainty. Allegro was well positioned to provide this solution given our specialised capability in business transformation, our strong track record and experience in retail and our structuring and restructuring capability.
TRANSFORMATION
Following Allegro’s acquisition, we partnered with the GBGM management team to separate and standup the four GBGM brands into standalone businesses with clear governance structures. Through this process, the shared services function was dissolved and capability was established in each of the businesses, with the Harris Scarfe and Debenhams businesses being restructured and sold subsequently.
The transformation of the remaining BLG business centred around resetting the strategy to be a customer-focussed, omni-channel retailer famous for Baby and Kids. This was supported through investment in digital and data, roll-out of click-and-collect, and re-launch of the customer loyalty program. Operational store improvements were also implemented including optimisation of the lease footprint, and the roll-out of new rostering systems which improved store contribution. During Allegro’s ownership, the business also significantly improved its working capital efficiency and undertook a sale-and-leaseback of company-owned property which enabled an early return of capital for the Fund.
These initiatives significantly transformed BLG into a growing business with improved profitability, enhanced capability and a leader in its space.
THE RESULT
In June 2021, Allegro sold a majority stake in BLG through an ASX listing which included a sale of a strategic cornerstone stake to BBRC, an entity owned by veteran retailer Brett Blundy. The IPO, which valued the business at an EV of $248m, had strong demand from both retail and institutional investors and was oversubscribed as investors were attracted to Best & Less Group’s strength in Baby and Kids, its defensible market position and growth potential. Allegro retained a 43% stake in Best & Less Group post listing.
In June 2023 Allegro sold its remaining shares in BLG, accepting the off market offer from a consortium of BBRC and Ray Itaoui to acquire all outstanding shares in BLG. This marked Allegro’s full exit from the investment, and the end of a rewarding journey. With BLG’s management team, Allegro led and supported a value creation plan that has helped define Allegro’s ongoing Active Complex Transformation (ACT) approach, leaving BLG in a much stronger position and future to when it was acquired in 2019.