Most investors would probably steer clear of the threadbare clothing manufacturing sector, where margins are still being frayed by cheaper imports.
But specialist retailer Holdsport, which owns the Sportsmans Warehouse and Outdoor Warehouse chains, has sewn up a deal to take over African Nature, a manufacturer of cotton-based clothing for the game lodge and safari markets.
The deal could enhance its wholesale offering, which stems from its specialist clothing manufacturing capability in Performance Brands.
African Nature is an established company, founded more than 22 years ago by entrepreneur James Terblanche, whom Holdsport intends retaining as executive manager.
The deal should slot comfortably into Holdsport’s existing specialist clothing interests in Performance Brands, which manufactures and markets the strong-selling First Ascent sports and outdoor clothing brands.
While small compared with Holdsport’s core retail offering, Performance Brands has been a surprisingly good profit contributor over the past few years.
In the financial year to end February, Performance Brands put in a feisty performance, with revenue rising almost 25% to R145m after an increase in sales to Sportsmans Warehouse and Outdoor Warehouse. Profit before tax was a not-insubstantial R28.5m.
Holdsport CEO Kevin Hodgson says "internal" turnover will continue to grow at a greater rate than demand from the independent market. External sales came in at only R49m — 4.1% lower than the previous financial year.
But Holdsport’s recent trading update for the half-year to end August showed total sales for Performance Brands rising 12.4%, with external sales showing growth of 31%.
The external sales figure could be further bolstered by African Nature’s brands in the medium term.