The acquisition of the two specialist retailers - both based in Cape Town - for an undisclosed cash amount, is being finalised and is awaiting the conclusion of agreements and regulatory approval.
The proposed purchase of Naartjie and Earthchild forms part of Truworths's strategy to create a children's emporium offering to its customers.
Earthchild Clothing is one of SA's leading retail and design houses, producing natural and organic cotton clothing.
According to its website, its mission of creating fashion "inspired by nature" was born in a student digs in Cape Town in 1992 and it has since evolved into two market-leading leisurewear brands, Earthaddict and Earthchild.
Its retail footprint includes 42 company-owned retail stores in SA and two e-commerce stores that serve the Southern African and European markets.
The purchase of Naartjie follows bankruptcy proceedings against its US-based owner. The deal has been approved by courts in the US.
Naartjie was established in 1989 in Cape Town by clothing designer Anne Eales. The company was sold to US investors in 2001.
The range of children's clothing was designed and manufactured in Eales's garage and sold exclusively at markets in Cape Town.
In 1991 Naartjie opened its first retail outlet in the V&A waterfront.
Fast forward to 2001 and Naartjie - which had flourished and opened stores in major shopping centres around the country - was sold to US investors, creating Naartjie Kids USA.
Naartjie MD Annemieke Doyle says that the impending purchase by Truworths will help boost the company's position in the children's-wear market.
"We are viewing this (deal with Truworths) in an extremely positive light as this gives us the opportunity to grow the brand and make Naartjie more accessible to everyone," she says.
Doyle says that Naartjie will retain its identity after the deal is concluded. "We will definitely retain our identity - this is very important to us and our customers... we have a partnership with a leading retailer that has the retail experience and systems to assist us in taking the Naartjie brand to the next level.
"It will give us the opportunity to focus on our local customer and unlock all the potential with sound financial backing".
Doyle adds that Naartjie will look at upgrading its stores when the deal with Truworths is finalised. It has 27 local stores. "At this stage we can confirm that there will be definite expansion. We will be opening at Bay West Mall in April 2015 and will be embarking on further expansion strategy for the near future," Doyle says.
Outgoing Truworths CEO Michael Mark, whose 23-year tenure at the retailer ends in March next year, says that Truworths' LTD Kids has become a very large business worth hundreds of millions of rand over the past 10 years.
"Earthchild and Naartjie added to LTD Kids creates a kids emporium offering to our customers of among the most appealing aspirational brands in SA," he says.
Mark says that Truworths will, as a result, offer its mainstream mass consumer target market the following:
Mark that says the purchase of Naartjie and Earthchild perfectly fits Truworths' strategy to own brands "well known to mass market with aspirational product".
He adds that Truworths has plans to roll out similar stores outside the country.
"Yes, (this is) included in our African expansion programme to over 100 stores in the next three to four years," he says.
Source: Business Day
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