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HILLS Limited (ASX: HIL), creator of the classic Aussie Hills Hoist clothesline, has decided to hang up its hat on homewares, deeming the sector no longer financially viable to pursue.
AMES Australasia, the company responsible for brands including Cyclone, Nylex and Northcote Pottery, has now taken over the Hills home living business and is set to kick off manufacturing and sales in the coming months.
Previously Hills had outsourced its homewares branch to Woolworths (ASX: WOW), but, following the collapse of Masters stores nationwide, Hills was forced to make a choice: resume the old business, or find a new buyer for it.
Hills CEO David Lenz said the board carefully weighed its options before deciding to stay out of the homewares game for good.
"We have undertaken a comprehensive strategic review of the Hills Home Living (HHL) business and determined that it was not viable for Hills to resume the manufacture and sale of HHL products," says Lenz.
"Hills will work closely with AMES Australasia to ensure the successful transition of the HHL business directly from Woolworths."
Assured that his company's homewares legacy is in good hands, Lenz says Hills will continue to focus on its other core business activities.
"The Hills of today is a value-added distributor of technology products and services and the company is focused on delivering security and surveillance solutions, audio visual, IT, communications and health solutions."
Lenz also expects the AMES acquisition will maximise the value of HHL for Hills shareholders, countering a recent financial rough patch.
"The benefits of the HHL transition from Woolworths to AMES will result in an improvement in Hills' EBITDA for the first half of FY17 over the first half of FY16 and will more than offset weaker trading results from our Hills Building Technologies (HBT) business," says Lenz.
"Even with an improved second quarter for the HBT business this has not made up for the underperformance of the HBT business in the first quarter of FY17 as outlined at our AGM in November."
Hills shares fell almost 3.53 per cent yesterday, and are currently trading at $0.41.
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