McPherson’s using Home and Think Appliances acquisitions to turn around financial results

Over the course of 12 months, the publicly listed McPherson’s Limited has gone from a leading supplier of household consumables to an appliance brand-house with the potential to become the next super-supplier.

In March 2013, McPherson’s entered the home appliance space by acquiring 82 per cent of Home Appliances, marketers of the Euromaid, Fagor and Venini brands. While Fagor and Venini have quite narrow appeal, Euromaid is a mass-market brand currently embarking on the very ambitious ’54 Project’, in which they seek to unseat Electrolux’s Westinghouse and Chef brands from their imposing 54-centimetre thrones.

Last month, Appliance Retailer exclusively revealed that McPherson’s had acquired a second appliance company, the Melbourne-based Think Appliances, supplier of the Baumatic brand. Traditionally a de facto house brand for The Good Guys, Baumatic has the potential to be a major player at the entry level, especially through the hardware channel.

All up across these two companies and myriad brands, McPherson’s is now registering around $80 million in sales per annum.

In a recent address to shareholders, McPherson’s chairman David Allman said these acquisitions were part of the “excellent work” undertaken my management to turn around two “difficult” years of trading.

McPherson’s has traditionally been a force in homewares, with brand such as Wiltshire, Stanley Rogers, Lady Jayne and Multix. Sources close to the company say revenue from this brands are being challenged by the explosion in retailer-sourced home brands, which compete with and undercut the name brands.

Although the home appliance market is also being challenged by this new hegemony of retailers acting as suppliers, McPherson’s is placing a large part of its short-to-medium term future in this industry.

“The market place challenges of the past two years have been very difficult to deal with and the poor financial results have masked the excellent work undertaken by management in improving the operations of the business and identifying, acquiring and integrating a number of acquisitions,” Allman said.

McPherson’s recorded a net profit after tax of $16.5 million for the 2013 financial year, down 10.2 per cent on the previous year. Since March 2013, the month of McPherson’s’ acquisition of Home Appliances, the company’s share price has declined from a high of $2.55 to currently trade at $1.54.