However witness statements lodged ahead of a trial scheduled for August 3 document plenty of behind-the-scenes drama too. As Honey Birdette grew exponentially following Mr Blundy’s investment in October 2011, Ms Barboza and Ms Monaghan were trying to manage the breakdown of their romantic relationship, which Mr Blundy was not even aware had existed until the end of 2013.
« I had not experienced anything of this kind in my professional life before (or since), » writes Mr Blundy, whose 40-year career in retail has seen him create brands like Sanity Music and Bras N Things.
« With two such senior business people – in this case, the founders and co-managing directors of a successful and growing business in which I was a majority investor – going through a public and bitter personal separation and in-fighting in the workplace. »
Mr Blundy says that acrimony between the founders was damaging Honey Birdette – Ms Monaghan accuses Ms Barboza of locking her out of the office at one point – and that he was forced to « choose » between them to salvage his investment.
« I held each of them in high regard. I agonised over the decision and was disappointed that Janelle and Eloise had put me in this position, » he writes in his witness statement.
Mr Blundy said he finally chose to exercise his option to buy out Ms Barboza’s shares, rather than the 15 per cent stake of Ms Monaghan, because she was the product expert in a product-based business, and also because she had been running the Australian business alone for months. Mr Blundy had encouraged Ms Barboza to move to the UK at the end of 2013, to launch Honey Birdette’s business there and to put distance between herself and her former lover.
However Ms Barboza ascribes a more cynical motive to Mr Blundy’s actions.
She claims she spoke up against Mr Blundy’s plan for Honey Birdette taking over Diva stores when he first raised it at a strategy meeting just after Christmas 2013. She worried that it would raise short-term costs, in the first year that Mr Blundy was allowed to exercise a call option over the founders’ shares, whose buyout price would be determined by 2013-14 profit.
« I said that if the company was to take on any of Diva’s liabilities, it would have to be on the basis that the earliest date at which [Mr Blundy] could exercise the call option would have to be moved further into the future to allow the company to recover, » Ms Barboza writes in her witness statement.
Both Mr Blundy and Ms Monaghan, who remains Honey Birdette’s managing director, deny Ms Barboza made any objection to the Diva plan at the Christmas 2013 meeting. Mr Blundy maintains the store takeovers were done with the long-term interests of all shareholders in mind, as they allowed Honey Birdette to grow fast without the costs of finding new sites and staff.
BBRC Capital insists on leases for all its brands that allow it to transfer occupancy between members of the group without landlord objection, a privilege he describes as « rare » in retail. Mr Blundy writes in his statement that both founders voiced support to him for this shortcut to growth.
Nonetheless, Ms Barboza claims Honey Birdette stopped achieving its budgeted targets for profit and earnings once the Diva takeover was implemented in March 2014.
Honey Birdette had budgeted for net profit after tax of $1,646,297 in 2013-14, but only ended up with $917,600. She claims this lead to a $1 million-plus devaluation of her shares when Mr Blundy exercised his option to buy them in November 2014, just before she was made redundant.
An independent expert report by Grant Thornton puts the devaluation of Ms Barboza’s shares attributable solely to the ‘Diva decision’ at $569,892.
However Mr Blundy’s hopes for long-term shareholder value creation from the ‘Diva decision’ have been realised. Honey Birdette achieved NPAT of $7.4 million by 2017-18 and $5.4 million in 2018-19, plus dividends to the current shareholders – including Ms Monaghan who retains her 15 per cent stake – of $3.5 million last financial year and $7 million the year before.
Ms Barboza’s suit is due for a review hearing on 29 July, with the trial listed to run the entire following week.