The S&P/ASX 200 Index (ASX:XJO) fell slightly on Monday. One highlight was the City Chic Collective Ltd (ASX:CCX) acquisition of Evans.
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The S&P/ASX 200 Index (ASX:XJO) fell slightly on Monday, down 0.1% to 6,670 points.
Here are some of the highlights from the ASX today:
City Chic Collective Ltd (ASX: CCX) acquisition
City Chic is going to acquire UK plus-size brand Evans from the Arcadia group. Evans has a long history, having operated for 90 years as a high street retailer.
The ASX share is buying Evans’ e-commerce and wholesale businesses, which generated £26 million (A$46 million) of sales for the financial year to August 2020. The Evans website had 19 million visits in that time.
However, this acquisition doesn’t include the store network of more than 100 locations in the UK. The administrators are entitled to trade from the existing Evans stores until the end of March 2021, in order to liquidate existing stock in the stores. The franchise business, based primarily in Middle East, is also excluded from the acquisition.
The Evans group (online, wholesale, stores and franchise) generated over £60 million of annual sales prior to COVID-19. City Chic said that Evans has high online penetration with almost half of direct-to-consumer sales (stores and website) being through the digital channel.
The store portfolio has been shrinking for a number of years with customers changing to the digital channel, which City Chic thinks will minimise any e-commerce sales leakage as a result of the administration-led store liquidation. The acquisition will be funded from City Chic’s existing cash balance, which was A$121 million before the acquisition. Its $40 million debt facility will remain undrawn.
City Chic said that this acquisition will give it a platform to launch into a new market worth £5 billion annually in the UK, or $9 billion in Australian dollar terms.
The City Chic share price rose by more than 11% today.
Private health insurance premiums
Private health funds across Australia have today received approval from the Federal Minister for Health for increases to the private health insurance premiums.
NIB Holdings Limited (ASX: NHF) has received approval from the minister to increase insurance cover premiums for NIB health funds by an average of 4.36% across all products. The changes are effective from April 2021.
NIB managing director Mark Fitzgibbon said the premium changes were a balance of affordability whilst ensuring NIB members can access medical treatment when and where they need it.
Mr Fitzgibbon said: “Premium changes are never welcomed but the reality is that the cost of medical treatment continues to rise well above inflation and we’re increasingly seeing members access healthcare services with health insurance a critical funding tool enabling treatment and care.
“A perfect example is the concerning increase in members accessing member health services. In the 12 months to 30 September 2020 mentals health benefits totalled $48.8 million.”
NIB also said that its contribution to the industry’s risk equalisation scheme is also a driver of its premium increase.
The NIB share price went up 3.75% in reaction to this.
The biggest private health insurer, Medibank Private Limited (ASX: MPL), said that it was approved for its lowest premium rise in 20 years.
Medibank said it has received approval to increase Medibank and ahm health insurance premiums by an average of 3.25% from 1 April 2021.
The Medibank share price went up by 3.75% today.
Travel shares drop, then recover
Many of the ASX travel shares fell heavily at the open after New South Wales was cut off from the rest of the nation as hard borders went up again in reaction to the COVID-19 outbreak in the northern beaches of Sydney.
At the end of the day’s trading, the Webjet Limited (ASX: WEB) share price finished 0.4% lower, the Flight Centre Travel Group Ltd (ASX: FLT) share price dropped 1.8%, the Qantas Airways Limited (ASX: QAN) share price fell 0.6%, the Sydney Airport Holdings Pty Ltd (ASX: SYD) share price dropped 0.8% and the Helloworld Travel Ltd (ASX: HLO) share price declined 4%.
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Helloworld Limited and Webjet Ltd. The Motley Fool Australia has recommended Flight Centre Travel Group Limited and NIB Holdings Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.