Brait all healthy, except for one in ICU
UK fashion retail business New Look’s valuation has plummeted, but remedial steps are being taken to restore it
When Christo Wiese acquired 34.6% of Brait in July 2011, a phenomenal growth phase was set in motion. By December 2015, the company, converted from a private equity to an investment business, had grown its net asset value (NAV) per share from R16.50 to R136.34. In pound terms, Brait’s NAV fell 28% from a peak of £6.73 in June to £4.86 at the end of December. The damage was far more severe in rand, which strengthened markedly against the pound following the Brexit vote. Brait ended 2016 with its NAV at R82.45, a fall of 39% over 12 months. With the rand now trading at about R16/£1, Brait’s NAV is just on R78, assuming there are no big changes in valuations of its holdings. It puts Brait’s current share price virtually on par with its NAV. After having been halved, Brait’s share price is technically very oversold. New Look made too many errors, including misreading fashion trend changes and being too slow to market in response to those changes. The retailer’s earnings before interest,...
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