SeeThruEquity Initiates Coverage on Garnero Group Acquisition Company with a Price Target of $15.18

NEW YORK, NY / ACCESSWIRE / March 24, 2016 / SeeThruEquity, a leading independent equity research and corporate access firm focused on smallcap and microcap public companies, today announced it has initiated coverage on Garnero Group Acquisition Company (NASDAQ: GGAC) with a price target of $15.18.

The report is available here: GGAC Initiation Report. SeeThruEquity is an approved equity research contributor on Thomson First Call, Capital IQ, FactSet, and Zack’s. The report will be available on these platforms. The firm also contributes its estimates to Thomson Estimates, the leading estimates platform on Wall Street.

Founded in 1917, Sao Paulo-based Grupo Colombo has approximately 400 stores across Brazil in every region of the country. Grupo Colombo is a well-established retailer in Brazil, with sales of over R$550mn in 2014 and EBITDA of R$133mn. The company has historically focused on menswear, and is the leading retailer of men’s shirts and suits in Brazil. Grupo Colombo has added 200 retail locations over the last five years and has a long runway for future expansion, as management estimates its brand can support up to 1,000 men’s stores. The company should also benefit from other growth initiatives, including an expansion into complementary apparel areas such as smart casual clothing and the new Colombo Woman brand. The combined company, Garnero Colombo, will receive a cash influx of $137.5mn, which will be used to de-leverage and fund the company’s growth initiatives, including new store expansion, acquisitions, strengthening its online presence, and growing its new smart casual and Colombo Woman offerings.

“On August 27, 2015, GGAC announced its intention to merge with leading Brazilian apparel retailer Grupo Colombo. The combined company, which will be named Garnero Colombo, has applied to remain listed on the NASDAQ under a new symbol after the completion of the deal, which we estimate will occur in 1Q16. We are intrigued by the acquisition of Grupo Colombo – a top three apparel retail brand in Brazil according to Exame Magazine with substantial growth prospects. We also see the timing of the transaction as potentially offering a nice entry point to an attractive long-term macro theme of the rising consumer in emerging markets, given recent price weakness in Brazil. Despite the recent weakness in Brazil, the long-term growth prospects for the largest economy in South America are robust, with retailers such as Grupo Colombo positioned to benefit from the rise in wealth and purchasing power of Brazil’s middle class over time,” commented Ajay Tandon, CEO of SeeThruEquity. “We are initiating coverage with a 12-month price target of $15.18 per share.”

Additional highlights from the report are as follows:

Grupo Colombo a premiere men’s apparel retailer in Brazil

Headquartered in Sao Paolo, Grupo Colombo is one of the largest and most well recognized apparel retailers in Brazil. The company’s network of approximately 400 stores includes a presence in every region in Brazil and has enabled the company to benefit from its own internal distribution system, nationwide advertising campaigns, and superior purchasing power with suppliers. Grupo Colombo is a leader in men’s apparel, selling over 5,000,000 shirts and 500,000 suits per year, with high brand awareness in Brazil’s strategically important B and C classes (lower middle to upper middle class) – an attractive demographic contributing 80% of the country’s annual apparel sales. After conducting an analysis of its brand awareness and market penetration, Grupo Colombo management is targeting over 1,000 men’s stores across Brazil – 2.5x its existing store count of 400. In addition to its core men’s shirts and suits business, Grupo Colombo has recently expanded its merchandizing initiatives to include men’s and women’s smart casual clothing. The decision has been a growth catalyst, with Polos & T Shirts now represent over 20% of sales, and we see the rollout of Colombo Woman in particular as representing an attractive next leg of future growth.

Multiple company-specific growth drivers ahead for Grupo Colombo

Led by its new women-focused brand, Colombo Woman, Grupo Colombo appears well positioned for future growth. The recently launched Colombo Woman concept enables Grupo Colombo to leverage its brand awareness in men’s suits and shirts to tap into the R$40Bn women’s apparel market in Brazil. Even if the company just accesses the low-hanging fruit by offering women’s dress shirts and smart casual clothing, successful execution in Colombo Woman could be a game-changer for a business that already has robust growth potential. Grupo Colombo recently opened 14 dedicated women’s stores and has seen nice initial performance. Longer term, Grupo Colombo management believes a dedicated women’s store concept for Colombo Woman could nearly double its overall potential market opportunity, supporting up to 2,000 stores company-wide.

Please review important disclosures at www.seethruequity.com.

About Grupo Colombo

Founded in 1917, Grupo Colombo is one of Brazil’s leading retailers with a focus on menswear, with over 400 stores throughout the country. GC has strong brand awareness for its clothing and is known for its high quality products at competitive prices. Basic pieces that don’t go out of fashion which consumers wear day-to-day for business or leisure are found throughout the year in its stores. Beyond the basics, GC also has a premium line that brings fresh ideas every season. For more information, please visit www.grupocolombo.com.br/investors.

About Garnero Group Acquisition Company

GGAC was incorporated in the Cayman Islands on February 11, 2014 as a blank check company whose objective is to acquire, through a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination, one or more businesses or entities.

GGAC, its directors and executive officers and EarlyBirdCapital, Inc. may be deemed to be participants in the solicitation of proxies for the extraordinary general meeting of GGAC shareholders to be held to approve the proposed transaction. Shareholders are advised to read, when available, GGAC’s preliminary proxy statement and definitive proxy statement in connection with the solicitation of proxies for the extraordinary general meeting because these statements will contain important information. The definitive proxy statement will be mailed to shareholders as of a record date to be established for voting on the transaction. Shareholders will also be able to obtain a copy of the proxy statement, without charge, by directing a request to: EarlyBirdCapital, Inc., 366 Madison Avenue, 8th Floor, New York, NY 10017. The preliminary proxy statement and definitive proxy statement, once available, can also be obtained, without charge, at the Securities and Exchange Commission’s internet site (www.sec.gov).

About SeeThruEquity

SeeThruEquity is an equity research and corporate access firm focused on companies with less than $1 billion in market capitalization. The research is not paid for and is unbiased. The company does not conduct any investment banking or commission based business. SeeThruEquity is approved to contribute its research to Thomson One Analytics (First Call), Capital IQ, FactSet, Zacks, and distribute its research to its database of opt-in investors. The company also contributes its estimates to Thomson Estimates, the leading estimates platform on Wall Street.

For more information visit www.seethruequity.com.

Contact:

Ajay Tandon
SeeThruEquity
info@seethruequity.com

SOURCE: SeeThruEquity

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