Naked Brand Group, Inc. (NAKD) has shown a lot of volatility lately, mostly to the upside and mostly news-related. This little niche company specializing in luxury underwear and sleepwear -- which debuted in 2010, IPO'd OTC in 2012, then moved to the Nasdaq in 2015 -- has a market cap under $25M. What seems to have put it on the momentum lists and driven the recent average volume of more than 900,000 shares a day (in a company with fewer than 10 million shares outstanding) is the idea that it was a prime acquisition target - and indeed, it looks like a merger is coming to pass.

Bendon Ltd., a 70-year-old New Zealand-based privately held company, has established an Australian holding company of which Naked Brands will become a subsidiary. The combined entity hopes to continue to trade on Nasdaq under the NAKD ticker. The synergies are clear: Bendon is not only a producer of multiple lines of underwear and sleepwear, but has a solid retail presence in Australia, New Zealand and Europe. Naked gets to avoid the pitfalls that face small companies making niche products, i.e., how to expand and sell without diluting their original emphasis.

I recently got the chance to interview Carole Hochman, CEO of Naked Brands, and didn't know what to expect, since her role in the new company will change. Fortunately for me, she seemed genuinely happy about the turn of events, not just financially but creatively. Here's what she had to say.

Q: The company was started by Joel Primus, and you came onboard in 2014, correct? 

Carole Hochman (CH): Yes, as CEO and Chief Creative Officer. My background is coming from luxury sleepwear. My whole mission as a designer, I grew up designing expensive lingerie for Christian Dior, and then I took the whole Heavenly Soft sleepwear concept to the public on QVC. To me sleepwear and underwear - it has to give you back a lot more than you spend. I was one of the first to do the whole cotton jersey premise, when you feel it you 'get' it. 

Q: What drew you to a startup?

CH: In the '90s, when I wanted to become an e-commerce site, they thought nobody would want that, that's why I sold that business. Every invitation I get to go to conferences and media is about how to do it in the disruptive world we live in.

And yes, I would say we are definitely a startup. When I got involved with Joel he was an omnichannel brand doing a small volume, trying to support a retail community and a website, and behind in having enough equity to do it. Joel and I reinvented Naked in 2015, made it not just men's underwear but a lifestyle brand for men and women. 

Joel's prices were too high for a volume business. We wanted to define luxury as the feel and not just the price. We spent a lot of time researching the proper fit, feel, fabric. We did original fabrics -- our women's fabrics  are all exclusive. For example, where most companies might use 95% cotton/5% spandex, ours is 91/9. A garment with 9% spandex is going to fit, it works for every body. My pima cotton underwear comes from Peru. Other people call it pima when it comes out of China but it's not, our fabrics are fantastic. And I'm saying that as a consumer as well as a designer and executive.

Q: You were confident in your products; where were the biggest challenges?

CH: The retail business has gotten really hard, especially in the past two years. Had I had my way since day one, we would have avoided the retail channel, but when I joined we were already doing business with Nordstrom's, Bloomingdale's, select high-end retail. Being a young company and supporting the retail side of the business has kept us in that startup environment. 

We do find that we do as much business on Bloomingdale's e-commerce site as we do in the store. Now we've been trying to make Amazon a big resource for us, as well as maintaining our own e-commerce site, wearnaked.com.

Even if you had a website before, it's changing now. The wonderful thing about Naked is that there is a story. People are into their own wellbeing and into feeling comfortable. We are not a licensor, not a celebrity brand, we have our own brand and our own mission story.So people can love the product and find us for themselves.

Q. Speaking of celebrities though - you did get quite a bit of raised profile from [NBA star] Dwayne Wade. How did that come about?

CH: We would probably never have thought to ask him, we were too small to do that, but he got some of the underwear and loved it and asked his people to look into the company. He loved the idea that we were small and he loved the company and the product, He's a very laid back guy, he didn't even want his name on it. He was irresistible. And certainly his involvement helped. But overall, we're really not in that mode. I don't think the majority of people today are looking for the name on the label when they are looking for a luxury product.

Q. You talk about your fabrics. These days companies are trying to carve niches out of 'green' and 'organic.' Is that something you've looked at?

CH: Not to minimize the interest in those niches - but, for example, it takes a lot of chemicals to make bamboo into fabric. I predominantly love cotton, which is certainly 'natural,' but does it have to be organic? When you go down that road then you have to be careful if you sell anything else. You have to be all or nothing; you can't sell our wonderful-feeling modal if you are going to sell organic. And to me the way a fabric feels is the most important. That said, we respect our factories. Even in China today they are very careful about the dyestuff and how they protect the water. The world has grown up a lot.

Q: Speaking of fit and feel: How does Naked in general, and you in particular, fit into Bendon?

CH: They have a great vision. Naked will be brand equity, where it has great potential for reach. In Australia, Naked can go to other stores, the product is so right for that marketplace, there really wasn't any product like it there. Bendon has up to about 60 outlet stores and several high-end retail stores, maybe one in New Zealand. I don't know what their exact plans are but I do know they are excited to have the Naked brand as part.

I went to Australia and New Zealand for a trip in December, before we did the merger. I met the executives, really got a look into the heritage of the Bendon brand and family. I have done my homework and there is a real synergy. This will help us get our product out to more people. Having the money to do customer acquisition on your website is huge. 

One of the things we've always had to worry about is how much risk to inventory; having a lot more doors to service will help me tremendously in purchasing also. They have a good sourcing office in Hong Kong. 

In the combined company I will be Chief Creative Officer. CEO is a fine job but I like to be the designer so I love the idea of having more brands to be responsible for. They have brands such as Bendon, Lovable, Heidi Klum, and I will be helping them with those as well. And the Bendon brand could bring to Naked an expertise in serious underwear; now we are soft, unconstructed, we could make serious underwear to fit more sizes without having to venture into sexy lace. Plus they do men's underwear - Bendon, Davenport - so Naked will become their premium men's brand. 

I made a trip out to LA to meet with Heidi Klum, which went very well, they haven't done Heidi sleepwear and that's something I will definitely get involved in. So not only can this merger make Naked a global brand but I am excited about what I can do to elevate the Bendon products in the sleepwear market.

Q: So it's safe to say that both you and your investors can be happy about the merger?

CH: Naked has a tremendous future in joining with Bendon. In addition to their products and their retail outlets, they do a great job of e-commerce. For example, they have a wonderful Frederick's of Hollywood website, they have a Heidi Klum website, they can help tremendously in exposing the Naked brand both in e-commerce and the Naked community.  

For Naked, the volume will be changed and the potential will be tremendous. Positioning it in terms of the investors is not my expertise but it should be a great opportunity to see their stock grow a lot faster, based on the sheer volume of the business we will have as a team.

Q. Thank you, and best wishes for the future.

You can see a Bendon perspective on the merger here and the announcement of terms here.