Scotch & Soda owner converts 200M loan into shares

The owner of Dutch fashion chain Scotch & Soda, Sun Capital, has converted a shareholder loan of 200 million euros into shares. The investment company is also supplying the fashion chain with 15 million euros in fresh capital.

Slight decline in turnover

The shareholder loan dates back to 2011, when Sun Capital paid 350 million euros for Scotch & Soda, and part of that amount appeared as debt on the fashion brand’s balance sheet. That debt was converted into shares to support the brand during the coronavirus crisis.

In its broken financial year 2020-2021, Scotch & Soda, like many other brands, suffered heavily from the Covid measures. Because of the crisis, many stores had to close their doors for months. “Throughout the year, our stores in Europe were not allowed to open fully. They had to close completely, or there were restrictions, like shopping by appointment”, CFO Thomas Bervoets told the Dutch newspaper FD.

However, the impact on revenue was limited to a 4 % decline to 278 million euros. The company owed this mainly to online sales, which grew by 18 %. In total, the webshop brought in over 57 million euros.

Synergy

Scotch & Soda wants to continue to grow and will open fifteen physical stores and seven shop-in-shops this year. In particular, in Germany, France, China and the United States, there are many opportunities, according to Bervoets. The company can count on an additional loan of 15 million euros from Sun Capital to finance its growth.

Bervoets remains convinced of the value of brick-and-mortar stores, even in a time when e-commerce is booming. “We believe that online and offline reinforce each other. People see your store, google it once, and buy online.” For the finance director, the physical store remains an essential channel, “a place where you can tell the story of the brand together with your employees.”