Lorna Jane gets active in its search for a $500 million buyer

Active wear retailer Lorna Jane is reportedly looking for a buyer, after choosing not to pursue an initial public offering.

Fairfax reports founders Lorna Jane and Bill Clarkson and private equity firm CHAMP Ventures have decided to put the business up for sale, with the price tag said to be set at $500 million.

However, a Lorna Jane spokesperson told SmartCompany this morning the company will not be commenting on the matter.

SmartCompany reported CHAMP Ventures was looking to sell its 40% share in the company via an IPO earlier this year but Fairfax reports the owners changed tracks after receiving multiple expressions of takeover interest from US businesses.

Lorna Jane and Bill Clarkson continue to own a majority stake in the business, which they founded in 1990 and have since expanded to 150 stores across Australia and the US. 

The company recorded profits of $19.6 million in the 2013 financial year, up from $12.9 million in 2012.

Retail Doctor Group chief executive Brian Walker told SmartCompany he would be surprised if the Clarksons wanted to sell their full stake in the business, but he said the rumoured price tag of $500 million suggests the entire company is for sale.

Walker is less surprised CHAMP Ventures would be looking to sell as “private equity firms, almost irrespective of the success of their investment, always have an exit strategy”.

“This is not a reflection on Lorna Jane, which has done exceedingly well,” he says.

“I’ve long admired Lorna Jane, which runs a very good retail operation,” says Walker. “It is one of the first examples of what I call an omni-channel retailer with its use of social media and online and in-store experiences. They are very clever.”

Referring to previous reports Lorna Jane was preparing for an initial public offering this year, Walker said “IPOs are typically all about raising capital, typically for businesses to expand”.

“Lorna Jane is at a point of their cycle where they have already raised capital and have expanded the business,” says Walker. “They have matured and expanded offshore so perhaps the owners have had a change of thinking and now think a sale is the best option to find new owners to carry the business forward.”

“Businesses generally tend to be cyclical and not that many companies stay around forever,” says Walker. “So maybe the owners are thinking, ‘Let’s take the money’.”

Walker says Lorna Jane is currently “positioned very nicely in the fitness and wellness industries but they won’t be short of competitors in coming years”.