Oroton Group Acquires 30% Stake in The Daily Edited

Last December we speculated The Daily Edited may just be the right collaboration for established Oroton, following its announcement of wanting to acquire new brands and expand into the personalisation trend. It’s all come to a head now following this morning’s ASX announcement from Oroton Group.

Oroton has agreed to purchase approximately 30% in online retail customised and personalised accessories brand The Daily Edited (TDE) for $4.5 million, comprising a combination of cash and Oroton Group shares. The investment is expected to be immediately accretive with double-digit EPS (earnings per share) acceleration forecast for FY18, according to Oroton Group.

Major Benefits

Oroton Group Acquires 30% Stake in The Daily Edited TDE rose byrneThe Group’s board believe its new partnership will be beneficial for a number of reasons, including strategic growth initiative, enhanced multichannel diversification and opportunity of scale.

For strategic growth initiatives, TDE is in line with Oroton Group’s strategy to add to its core brand portfolio of complementary, affordable luxury brands, that can leverage its back office structure as a platform for growth.

Enhanced multichannel diversification means that teaming with pureplay TDE is expected to accelerate the Group’s online offering and complement its existing sales channels and strengthen Oroton Group’s exposure to TDE’s younger market segment and dedicated consumer base.

In partnering with TDE, Oroton Group says it will also be able to scale its existing business more quickly, improve operating margins and access a broader customer and supplier network.

“Today we are embarking upon an exciting new partnership with Alyce and Tania (TDE founders). The TDE brand, management team and online presence will provide Oroton Group with fresh new growth options and access to a faster growing, younger Australasian customer base, presenting attractive future growth optionality over and above that already established in our business today,” says Oroton Group’s chairman John Schmoll.

“The relationship with TDE will provide Oroton Group with increased flexibility to meet changing consumer tastes and better position our business for growth,” remarked Mark Newman, CEO and managing director of Oroton Group.

The Deal

Oroton Group will acquire an initial interest of approximately 30% in TDE’s equity for $4.5 million, comprising $2.7 million of cash to be injected into TDE and $1.8 million of Oroton shares to be issued to TDE’s founders Alyce Tran and Tania Liu (pictured above).

In addition, the Group will have the opportunity to increase its holding to a majority stake in future periods. TDE’s founders and current shareholders will have rights to receive up to a total of $1 million of additional shares, subject to the satisfaction of certain performance criteria. The investment is expected to be immediately EPS accretive for Oroton Group, with double digit EPS accretion forecast for FY18.

Oroton Group Acquires 30% Stake in The Daily Edited TDE alyce tran tania liu e-commerce

TDE Operations

TDE founders Alyce Tran and Tania Liu will continue to operate the business following the transaction, and realise both future growth and productivity opportunities facilitated through its partnership with Oroton.

“This transaction represents a significant milestone for TDE, signalling its transition from an emerging online retail business to an established fashion brand and recognised destination for customised accessories. We are excited by the opportunity to partner with Oroton Group and learn from and leverage its proven retail and back office capabilities and network, and together grow both companies to leading positions in the industry,” says TDE’s Tran.

The transaction is not subject to any material conditions and is expected to close on around 4th April 2017.

About TDE

Originally commencing as a blog in 2011, TDE later launched a leather accessories line in 2014. Since then, under the management of founders Alyce Tran and Tania Liu, TDE has established itself as a leading brand in both women’s and men’s personalised leather fashion accessories, with a product range that includes bags, pouches, clutches, wallets, phone cases, stationery and diaries.

The business operates a direct-to-consumer model, primarily through its online platform and concession outlets, with additional growth through its new standalone retail offering. TDE recently has approximately 40,000 active customers on its online platform, and around 185K social media followers across Instagram, Twitter, Facebook and Pinterest.

The company has experienced top line growth since its launch only three years ago and says it’s on track to achieve FY17 sales of approximately $19 million, which is a more than threefold increase compared with FY16, with sustainably profitable operating margins.

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