LOS ANGELES, Calif., Oct. 27, 2003 (PRIMEZONE) -- Aussie Apparel Group Ltd. (OTCBB:AASI), announced today that it signed a definitive agreement with Santa Ana, CA based Krash Distribution Inc. to license (with an option to purchase) the TSA(r) extreme sports apparel brand. The TSA(r) brand, which stands for "True Sports Apparel," has been a fixture within the core extreme sports retail community since 1991. Aussie Apparel had announced a letter-of-intent pertaining to the TSA(r) brand on July 8, 2003.
Bruce MacGregor, President and CEO of Aussie Apparel said, "As Aussie Apparel emerges from its developmental phase, management has refined its business plan to allow for rapid growth within the extreme sports apparel market. With the recent addition of the Bluetorch(tm) label to our portfolio, the licensing (with an option to purchase) of the TSA(r) brand is an important step forward as Aussie re-aligns its core business. Given that the Bluetorch(tm) brand provides Aussie with a strong presence across all extreme sports categories within the our core and specialty shop retail channel, we have decided to introduce the TSA(r) label into mass-market retail distribution channel, providing us with much greater leverage for rapid revenue growth. We anticipate TSA(r) revenues of $47 million over the next five years."
MacGregor added, "Now that we have a vehicle by which to pursue a presence in the core retail distribution channel with the Bluetorch(tm) label, management has decided not to pursue the purchase of the November(r) brand as announced in July. Aussie's singular focus within the core shops will surround the promotion of the Bluetorch(tm) brand."
Anthony Mandich, President of Krash Distribution Inc. said, "Aussie Apparel's revised strategy for the TSA(r) brand is one that will expose it to a much broader audience, which will result in a mutually beneficial situation for Krash Distribution and Aussie Apparel. Licensing the TSA(r) brand to Aussie Apparel for the mass-market will also allow us to devote all of our energies to building the November(r) brand in the core shops." Aussie Apparel anticipates delivering the first TSA(r) merchandise to mass-market channels in the second half of 2004.
MacGregor stated that the Company has been in conversation over the last few months with Federation Group (majority owner of Frontier International Holdings) regarding the possible restructuring of their relationship. Aussie Apparel signed a definitive agreement with Frontier in December of 2002 to acquire the Hot Tuna(r), Xisle and Piranha labels. According to the MacGregor, the conversations have centered around Aussie Apparel focusing only on the Hot Tuna(r) label for the North American market. To that end, Aussie Apparel would give up the Xisle and Piranha brands and the Hot Tuna(r) licensing agreement previously announced for the South Pacific with Frontier. Additionally, Aussie Apparel would assign the previously announced Revo licensing agreement (for Great Britain) to Frontier.
Regarding the domestic front, MacGregor stated, "Part of the brand realignment strategy that we have discussed with the Australians is to shift the Hot Tuna(r) brand's distribution to the mid-tier department store and sporting goods channel. In essence, Hot Tuna(r) would replace the Xisle label in this channel and would be available at retail mid 2004. Assuming we come to an agreement with the Australians on a revised relationship, I feel that this is a significant upgrade in terms of brand (Hot Tuna versus Xisle) awareness and revenue potential in the mid-tier channel. This would also allow us to replace Hot Tuna(r) with the Bluetorch(tm) brand in the core and specialty shops, which once again, is a significant upgrade."
Added Stewart Kawamura, National Sales Manager, "As a result of our realignment of brands and their respective channels of distribution, we will not be shipping Hot Tuna(r) into the core shops such as Zumiez and Tilly's as previously announced. As a result, we will focus all our energies surrounding Hot Tuna(r) on the much larger mid-tier retail segment. In terms of the limited revenue we anticipated from Hot Tuna(r) in the core shops this quarter, we are confident that we will more than make it up with shipments of Bluetorch(tm) apparel into those same shops."
MacGregor said, "With Bluetorch(tm) replacing Hot Tuna(r) in the core shops, Hot Tuna(r) potentially replacing Xisle in the mid-tier and TSA(r) replacing Piranha in the mass-market, we feel strongly that we have dramatically enhanced our ability to achieve our sales projections over the next five years. The brand targeted to each level of distribution is significantly stronger and better known with consumers as compared to the brands they are replacing in each channel respectively."
Aussie Apparel stated they anticipate coming to a final resolution with Federation Group regarding a potential restructuring of their relationship within the next two weeks and that an announcement would be forthcoming at that time.
About TSA(r)
The TSA(r) brand was launched in 1991 by Jim Waataja, a former professional skateboarder, as a "cool" brand of apparel for skateboarders and their friends. Waataja designed the TSA(r) brand for skate and other extreme sports enthusiasts with a strong hip-hop/alternative influence. The TSA(r) brand is a well-recognized name in quality apparel for skateboarders.
About Aussie Apparel Group, Ltd.
Aussie Apparel Group is an emerging apparel company with a well-defined growth strategy focused on licensing, marketing and sales of apparel and related products for the extreme sports enthusiast. The Company's management team is focused on increasing shareholder value while expanding its product line to address the needs of the extreme sports arena- one of the fastest-growing segments in the sporting goods and apparel industries. Additionally, Aussie Apparel is aggressively seeking compatible acquisition candidates in order to contribute to expanding marketing channels, while growing revenues and earnings for the parent company. For more information or to stay updated on the Company's progress, visit: www.aussieapparelgroup.com or www.otcfn.com/aasi.
Safe Harbor:
This release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The risks and uncertainties that may affect the operations, performance development and results of the Company's business include but are not limited to fluctuations in financial results, availability and customer acceptance of our products and services, the impact of competitive products, services and pricing, general market trends and conditions, and other risks detailed in the Company's SEC reports.