Please ensure Javascript is enabled for purposes of website accessibility

Why Naked Brand Stock Popped Today

By Joe Tenebruso - Apr 23, 2021 at 4:50PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The company's transition to an e-commerce pure-play took a major step forward.

What happened

Naked Brand Group's (NAKD) stock price climbed 4.8% on Friday after the swimwear and intimate apparel maker said its shareholders voted to approve the sale of its traditional retail business.  

So what 

Naked Brand Group will now divest its unprofitable Bendon brick-and-mortar operations and focus solely on its e-commerce platform. CEO Justin Davis-Rice said the company would also consider purchasing other businesses to bolster Naked's online growth initiatives.

"Our Frederick's of Hollywood e-commerce business continues to perform, and we are currently evaluating several synergistic acquisition targets that could position Naked as a strong player in intimate apparel," Davis-Rice said in a press release.

A person is sitting behind a computer and giving a thumbs-up.

Investors applauded Naked Brand Group's new e-commerce-based strategy. Image source: Getty Images.

Davis-Rice also highlighted Naked's debt-free and cash-rich balance sheet. The apparel maker has amassed a war chest of $270 million in cash reserves following a series of share offerings in recent months.

Now what

Management believes this cash will generate better returns for shareholders in the potentially higher-margin e-commerce sector than the company has been able to achieve in its money-losing retail business. Time will tell if that's the case, though Davis-Rice certainly appears optimistic about Naked Brand Group's future.

"With available cash of $270 million, a clean balance sheet with no debt, and a reinvigorated management team and board of directors, I could not be more excited to execute on our business strategy to ultimately drive revenue growth with positive free cash flow," Davis-Rice said.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Naked Brand Group Limited Stock Quote
Naked Brand Group Limited
NAKD

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
316%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/05/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.