MAMBO seeks roots
Label sold for what amounts to a song
January 30, 2008
GAZAL Corporation has sold its idiosyncratic street and surfwear label Mambo for about half what it paid for it nearly eight years ago, in a deal in which a private equity group will take over the group and return the brand to its roots.
Despite saying the brand would be retained if it could not find the right buyer or get a good price, sources close to the deal said Gazal sold the brand for about $10 million.
This is well below the $20 million that publicly listed Gazal paid founders Dare Jennings and Andrew Rich in March 2000 for the surf label famous for its farting dog artwork.
The sale includes eight stores plus wholesale distribution rights to surf stores and David Jones in Australia and overseas except for Europe, where the licence is held by British company The Outdoor Group.
Gazal managing director Michael Gazal said he was unable to comment on the confidential price, but said it was in excess of book value.
He said the funds would be used to pay off bank debt, while the company focused on its other brands, which included workwear brand Bisley, men's wear label Van Heusen and underwear brand Loveable.
Buyer of the brand is Equity and Capital Finance Australia, which is owned by a group of private investors, as well as by Sydney accountant Tony Woodward and surfwear retailer Angus Kingsmill. It plans to focus on "getting the product right" and hiring staff, including designers and artists. Reg Mombassa will also return.
Refurbishing the existing eight stores and expanding the network were also on the agenda, Mr Kingsmill said. "We want to re-establish that heritage but at the same time modernise it."
This would be achieved by returning to the days of "iconic surf-art, music and humour", but with a modern interpretation. Mr Kingsmill hopes to expand the brand overseas, first into the US through board sports retailer Pacific Sunwear, and then into Japan, South Africa and Canada.
Mr Kingsmill hopes to raise sales by 50% this calendar year and double them by the second year.
Mambo's retail sales, including those from international licensees, were $40 million in 2006-07.
Seven companies made indicative offers for the label, a field that was reduced to three in the final due diligence stage.
Paul Veltman, from Origin Capital, who assisted with the sale, said the unsuccessful bidders included an unnamed ASX-listed rag trader and another local private equity firm.
The final prices were close, but other considerations swayed the decision.
Gazal shares closed yesterday unchanged at $2.10.
I think they found them. It's now stocked at Myers in big amounts from youth to kids wear. Gazal should of taken it out of David Jones and gave it to Myers a long time ago. Then it would of been making them money.