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AVI buys Green Cross

1st Aug 2012 , S&V Footwear and Leather Goods

'Plan is to grow the company, not change it'

Johannesburg (SA) – Diversified consumer goods company AVI Ltd, which bought Green Cross in July, will maintain the current structure, including manufacturing, importing, wholesaling and retailing, business development executive Michael Koursaris said.

“We were interested in the brand as a whole rather than any one of the divisions. There are few opportunities to control a brand of this pedigree, even fewer to own one.

“We like the fact that there is retail element to the business, and the factory manufactures product at a cost that is competitive with imported alternatives. Currently, Green Cross imports 40% of its sales volumes, and AVI has every intention of maintaining the factory’s productive capacity as this gives us deep advantages in speed to market and flexibility. We have every reason to believe that the economics of this enterprise can be sustained.

“We’ll continue to grow Green Cross’ wholesale business, which currently contributes more to sales volumes than Green Cross’ owned stores – there are over 1 500 wholesale customers, against 30 owned stores.

“We’ll open as many stores as we think are commercially viable without cannibalizing the market or damaging our wholesale customers. When we bought Spitz, it had 23 stores – now there 60, as well as an additional 24 stand-alone Kurt Geiger stores.”

He said members of the Zeppel family in management had a 1-year contract to manage the business, “and they continue to have a vested interest in its ongoing profitability through an earn-out mechanism”.

Aside from the R382.5 million that AVI paid for Green Cross Manufacturers, Green Cross Retail Holdings, and Green Cross Properties, an additional R35 million will be payable “subject to certain profit hurdles being achieved in Green Cross’ financial year to end-February 2013”. – [Tel: +27 (0)11 502 1300, email: lisas@avi.co.za]




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