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US bankruptcy court OKs sale of Avenue's e-commerce business to City Chic

Australian fashion retailer City Chic Collective Ltd. said it received approval from the U.S. Bankruptcy Court to acquire e-commerce assets of Avenue Stores LLC, the U.S.-based maker of plus-size women's clothing, for US$16.5 million.

The asset sale is part of Avenue's Chapter 11 bankruptcy proceedings, under which the Ohio-based retailer has closed its more than 250 stores across 35 states in the U.S.

City Chic expects the e-commerce acquisition to be earnings accretive despite the effects of Avenue's bankruptcy and physical store network closure. Avenue disclosed e-commerce sales of US$27 million during the first five months of 2019.

The Sydney-based retailer said the acquisition will allow them to tap a larger section of the U.S. plus size market, which is estimated to be US$25 billion annually.

"This acquisition delivers on our vision of 'leading a world of curves.' It means that City Chic now has a portfolio, or a collective, of online businesses that we can leverage to further build our Northern Hemisphere presence," said City Chic CEO and Managing Director Phil Ryan.

"Our City Chic, Avenue and Hips & Curves brands will allow us to speak to more plus-size women and deliver on-trend, well-fitting garments across multiple price points."

The all-cash transaction will be funded from existing cash and credit facilities, on top of an additional A$12.5 million 12-month facility, City Chic said.

The transaction is expected to close Oct. 14 and is no longer subject to any customary closing condition.