SOURCE: Healthzone

Healthzone

July 07, 2010 08:30 ET

Healthzone Launches First Franchise Retail Store in China

SYDNEY, AUSTRALIA--(Marketwire - July 7, 2010) -  Healthzone Limited (OTCQX: HLTZY) (PINKSHEETS: HLTZY) (ASX: HZL) ("Healthzone" or the "Company"), Australia's leading natural products distributor, franchise retailer and producer of health, beauty and natural products, today announced the launch of the Company's first Healthy Life China store in Shanghai's iconic Jin Mao Tower J-Life Shopping Center. A second store is scheduled to open next week in Asia's largest new shopping center, the Sun-Moon-Light (SML) Shopping Center in Shanghai. The Company expects to launch an additional five high profile stores for 2010 and a total of 100 Healthy Life China franchises are planned for launch by the end of 2012.

Peter Roach, Executive Chairman, commented, "Establishing the Healthy Life Franchise in China is another step towards expanding promotions and retail operations of Healthzone owned brands and distributed products throughout Australasia. As the leading natural products retailer, brands and distribution business in Australia, Healthzone intends to duplicate this dominant position in Australasia within the next five years. To support this strategy, Healthzone is advancing the registration of HL Vitamins, Healthy Life Food, Natural Alternative and BOD ranges for the China market and project to have over 100 new branded items to be distributed through the Healthy Life China network by the end of 2010. Consistent with the Australian Healthy Life model, the Company intends to launch over 500 high margin products through this new Healthy Life China retail model.

"Healthzone is well positioned for a rapid roll out of Healthy Life stores having successfully operated an established retail business of over 1600 Aurinda retail counters in China over the past 12 years through an experienced local Shanghai based office and management team. The Aurinda counters have provided a platform to promote Healthzone's Aurinda vitamin product lines as one of China's most recognized imported nutraceutical brands. As the largest natural food store franchise and natural products distributors in Australia, it is a logical next step to expand into the Chinese market with our products through the expansion of Healthy Life as a vehicle for up to 2,500 new Healthzone or third party distributed products."

The opening of the first Healthy Life China store is a milestone event launching Healthzone's retail business into a wellness market of over $30 billion annually, growing at more than 17% annually, compared to the Australian market of $2.1 billion growing at 6% per annum. China represents 20% of the World's population with 1.4 billion people growing and Healthzone is positioned strategically to build its retail operations and grow within this huge wellness market.

Franchise store acquisition

Healthzone further announces today that it has reached an agreement, subject to standard contractual terms, for the acquisition of a chain of Australian franchise natural products stores.

Executive Chairman Peter Roach said, "The acquired entity has been a large multi store franchisee of Healthy Life and the acquisition will deliver to Healthzone the equivalent in terms of EBIT contribution of an additional 30 Healthy Life stores due to the opportunity to promote more of our higher margin branded and distributed products."

Healthzone owned and operated stores provide a 35% greater average annual revenue than the average franchisee operated stores with more than 65% of COGS sourced from Healthzone owned and distributed brands compared to 44% of COGS by franchisee stores.

Mr. Roach said, "From an operational and strategic brand development perspective it makes sense for Healthzone to own and operate more of its own stores in Australia. Store ownership empowers us to drive our own branded and distributed products in our market which provide up to four times the gross profit of third party products. Integration of the acquisition provides immediate synergies being realized with the closure of the acquired entities' administration offices and roll-up of the store management into the already established Healthzone corporate store infrastructure."

The Company confirms that the acquisition is EPS accretive consistent with Healthzone's acquisition principles and is scheduled to be completed prior to the July 30, 2010 for an undisclosed sum. The acquisition will be wholly funded from cash reserves with no requirement for a further capital raise.

About us:

Healthzone Limited operates a portfolio of distribution, consumer product and retail businesses in the Wellness sector. Each business provides immediate opportunities for earnings growth through business development and integration. www.healthzone.com.au

Contact Information

  • Contact Details

    Healthzone Limited
    Peter Roach
    Executive Chairman
    Tel: +612 9772 7100

    Healthzone Limited
    Michael Jenkins
    Company Secretary
    Tel: +612 9772 7102

    USA
    Grayling USA
    Investor Relations
    Leslie Wolf-Creutzfeldt
    Tel: +1 646 284 9472