BSA Brands will operate as a wholesale distribution business providing a range of Workwear, Safety wear, Protective wear and PPE. The business will initially market Bisley Workwear in the UK and West African markets, launching in May 2019. It is intended that other leading Australian recognised product brands will be introduced into the joint venture over time under exclusive distribution rights.
The venture brings direct access to Bisley factory manufacturing, product development and design innovation specific for the UK, Europe and West Africa markets whilst leveraging off the existing presence that Bisley has in the Australian marketplace and the sales, marketing and distribution platform that Stealth has built in Africa.
Growth in the West Africa marketplace will be enabled by the appointment of three local distributors to supply the resources, infrastructure, transportation and construction industry sectors in this region.
BSA Brands will invest around $1.5million over the next two years to build sales, brand awareness and increase market share. Stealth will transfer its existing African Bisley customers and revenue into the joint venture where they can be better serviced from a closer distribution proximity.
Mike Arnold, Stealth Managing Director, said: "This is such a significant milestone for Stealth. no other Australian company of our type has been able to achieve this breakthrough in the market. The BSA Brands joint venture presents a tremendous and unique new growth initiative for Stealth and Bisley. We have developed a strong working relationship over the past five years and have been looking at ways to build upon this.
"The UK market has a significant scale with a competitive landscape that is very fragmented, and our combined strengths in distribution and a quality workwear range provides a compelling customer and market offer. We have been carefully researching the market over the past 12 months including the market uncertainty created by Brexit. We believe a joint venture arrangement better manages the market entry risk and margin potential, by leveraging the combined strengths and capabilities of Stealth and Bisley from manufacture to delivery."
As a part of its agreement with Bisley to establish BSA Brands, Stealth will migrate a number of its existing Bisley Workwear customers in Africa and new UK domestic sales programs into the new Joint Venture, which is likely to reduce Stealth’s prospectus revenue forecast in this area for FY 2019 by $2.8 million, although the company expects a positive return as a result of the investment.
Bisley Workwear Owner, David Gazal, added: "As one of Australia's fastest growing workwear brands, Bisley prides itself as a company with old fashioned values: We value integrity, so we do what we say we're going to do, on time and on budget. Bisley partners with brands that share these values and business integrity.
"Having worked with Stealth for a number of years, we feel Stealth is the ideal partner with a similar business philosophy to expand into the very large UK and West Africa markets. We have witnessed Stealth's expansion over recent years, particularly in the international arena. We like the emphasis it places on customer service delivery and it has established a footprint to enable to Bisley range to enter these new geographies as part of our international expansion strategy.
"Importantly, the collective strength of both businesses, through our joint venture, gives us control of the supply chain from the point of manufacture to the end customer."