Naked Brand Group Limited (NAKD) stock prices were down by 8.42% as of market close on May 4th, 2021, bringing the price per share down to USD$0.5940 at the end of the trading day. Subsequent pre-market fluctuations saw the price fall by another 5.34%, bringing it to USD$0.5623.
e-Commerce as the New Standard
With the global pandemic having ravaged the retail space, both buyers and sellers turned to e-commerce as a means of circumventing government mandate regulations and restrictions because of Covid-19. NAKD, too, followed this trend, going so far as to completely dispose of its unprofitable brick-and-mortar operations, the company announced on January 21st, 2021.
Divesting of Bendon Ltd.
The transformative restructuring led to the signing of a nonbinding and non-exclusive term sheet that divests NAKD of its subsidiary Bendon Limited. As the company focuses exclusively on its strategy to facilitate the rapid acceleration of its e-commerce business, Bendon is divested to a group comprised of existing management of NAKD.
Reallocation of Resources
Following the completion of the divestiture, resources and efforts have been allocated towards the development of the Frederick’s of Hollywood online business. The company also plans to capitalize on opportunistic strategic acquisitions in the e-commerce market space in the hopes of not only complementing the existing online business but facilitating the generation of cross-business operational synergies.
Scope of e-Commerce Business
Recent capital generation has had the funds deployed for complimentary growth business in the e-commerce sector, which boasts high margins. This move could also see future investments in technologies to better serve customers with a positive experience of the company’s online offerings. The company finds itself with unprecedented capital to invest where it sees fit, given the absence of the unprofitable Bendon business leeching capital to keep it afloat amid consistent and significant losses.
Future Outlook for NAKD
After the completion of the divesting project that was in the works for a very long time and presented many obstacles to the management team from an operational and financial standpoint, the company is poised to capital on its newfound weightlessness. With a strong balance sheet, no reported debt, and an operating model that is asset-light, the company forecasts continued success in a very favorable M&A environment in global e-commerce businesses.