OVS drops plans to buy Italian department store group Coin

Italian budget fashion retailer OVS has abandoned its plans to buy department store chain Coin, which currently operates 37 branches, and from which OVS had been spun off prior to its stock market listing in 2015. The merger between the two Veneto-based companies fell through after over six months of negotiations, at the end of which OVS, led by Stefano Beraldo and still committed to reducing debt, decided the investment was too onerous. It was surely a different proposition to the mere €4 million disbursement which enabled OVS to buy Stefanel’s stores and design archives two years ago.

“The two parties have decided to end negotiations,” said OVS in the comments to its preliminary report for fiscal 2022. The year ended with net sales worth €1.5 billion, up by 11% also thanks to a positive performance in the Christmas period and, more significantly, in the winter end-of-season sales. OVS expects to grow further in 2023.

The budget chain has recognised the commercial value of the Coin brand and stores but, while still keen to assess external growth opportunities, it decided to continue to deleverage, convinced that, in the current market context and given its share price performance, this policy is in the best interests of OVS shareholders.

Coin sold OVS under pressure from a previous financial partner, the BC Partners investment fund. The department store group was then taken over by its senior management and a pool of Veneto investors and, like OVS, will continue to operate independently.

OVS's revenue was worth in excess of €1.5 billion in 2022 thanks to a net revenue of €420 million in Q4, up 11%. The chain’s profit margin also improved, with EBITDA growing by over 10%. This was instrumental in generating an annual free cash flow in excess of €60 million, and a leverage below 1.00x as of January 31 2023. Also on the positive side, the inflationary pressure on costs experienced in 2022 seems to be weakening, with a decrease expected in the second part of 2023, so that further growth is forecast for the current year.