16 July 2001
Cape-based corporate branding apparel and footwear company, LA Group,
announced today that it is to dispose of its retail division over the coming
six months in line with its strategy to focus primarily on its wholesale
branded division and corporate clothing business.
According to Group Managing Director, Showkat Mukadam, the scaling down of
retail operations comes on the back of continued difficult trading
conditions, which have seen the LA Jean and Oxygen stores becoming minor
contributors to the Group's overall turnover in recent years.
"In keeping with our stated objective in our year-end announcements to find
creative ways of realising value from the retail operations, we have decided
to dispose of these stores on an individual basis," he explains.
To this end, the LA Group has engaged Greenfields Venture Capital (Pty) Ltd.
as the transaction managers for the process, and negotiations have commenced
with potential new owners of its individual retail stores. According to
Mukadam, the aim is to form smart partnerships that will see the stores
continuing to source LA Group product lines with the option of retaining or
disposing of the LA Jean Company or Oxygen store names.
"New owners will have the option, depending on their desired relationship
and procurement policies with LA Group, of retaining the existing brand
names of the stores or creating entirely new identities," Mukadam says.
"In this way, the LA Group stands to continue to derive income from these
stores, while also enabling the introduction of new independent stores,
thereby expanding the LA Jean and Oxygen brands into geographic areas where
they previously enjoyed little or no exposure."
As part of the restructuring, the LA Group will be closing any loss making
stores that are not sold by the end of the current financial year.
"We believe that the disposal of the retail operations in this manner will
enable us to continue to derive a measure of benefits from the brand equity
that has been built up through these stores in the past, while enabling the
Group to focus its efforts to a greater extent on its local and
international corporate clothing operations," Mukadam concludes.
Ends.
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