manufacturer VF Corp is to acquire upmarket jeans maker ''Seven'' and women''s activewear
company Lucy Activewear for a combined $885 million. While Bear Stearns Merchant
Banking owns denim designer company Seven For All Mankind LLC, Lucy Activewear
Inc is held by private equity firms.
Los Angeles-based Seven For All Mankind cost $775 million, tripling the original
investment made by Bear Stearns Merchant Banking. A little more than two years
ago, the firm invested a little under $100 million for a 50 per cent stake. The
other half was owned by L''Koral Inc, a company controlled by Seven''s founder Peter
jeans are sold at trendy boutiques and at luxury stores like Barneys New York,
Neiman Marcus and Saks Fifth Avenue. The company is growing by 15 per cent annually,
and generates $300 million in revenue. After its takeover by Bear Stearns, its
earnings have increased by about 65 per cent, after the firm expanded organically,
coming up with non-denim products like shirts and tops, a line of bags and a license
for women''s and men''s shoes.
For All Mankind''s first exclusive retail store will open in November.
March 2006, Seven hired Mike Egeck as CEO. Earlier, Egeck headed the Greensboro,
North Carolina-based VF''s outdoor-Americas division, which has brands like North
probably why the deal went through so quickly. Egeck will now become president
of VF''s newly formed contemporary brands business, which will have over $350 million
in annual revenues. The two acquisitions should drive sales growth of 15 to 20
percent a year over the next five years.
other businesses include sportswear and imagewear, with brands like Lee and Wrangler
jeans, Eagle Creek outdoor wear and Nautica clothing. Lee and Wrangler jeans are
priced far below Seven jeans, and their positioning in the premium consumer segment
is one of the factors behind the decision. The other is that the premium denim
brand has operating margins of over 20 percent. Seven For All Mankind can grow
to some 100 stores over the next 10 years under VF management. Some 27 percent
of Seven for All Mankind''s business is international, primarily in Europe.
Activewear has about $57 million in revenue, and is expected to make a small loss
this year. VF is paying $110 million for the women''s wear brand, which operates
50 stores in the United States and also has a direct-to-consumer business. The
Lucy acquisition represents the first time VF has acquired a pure retailer rather
than an apparel wholesaler.
believes it can lower Lucy''s sourcing costs, using its outsourced infrastructure
in Asia. It plans to open 20 Lucy stores a year, to add another 200 stores in
10 years. Lucy
is presently owned by private equity and venture capitalist firms, including Lone
Pine Capital, Maveron LLC, Oak Investment Partners and Sutter Hill Ventures. Women''s
wear retailer Chico''s FAS holds a minority stake in the Portland, Oregon-based
business. Both of VF''s purchases are expected to close in August.