Authentic Brands Group can stick another feather in its cap with its Vince Holding Corp. deal that further pads the brand management firm’s luxury portfolio.
The two companies’ partnership, which was announced Monday, involves a few components: Vince, with a design studio in Los Angeles, will be paid $76.5 million in cash from Authentic to put up its intellectual property to a newly formed ABG Vince subsidiary. Authentic gets a controlling interest—75 percent—in ABG Vince. Meanwhile, Vince gets the remaining 25 percent stake.
From there, Vince agreed to an exclusive, 10-year licensing agreement in which it pays Authentic to use the IP, in addition to a royalty fee that goes to the ABG Vince subsidiary.
“Looking ahead, we believe this partnership is not only transformative for our business, but an important step in capitalizing on the potential for the Vince brand with a highly experienced and equally committed partner,” Vince CEO Jack Schwefel said Monday during the company’s quarterly results call.
CFO Amy Levy confirmed the Vince wholesale, retail and e-commerce channels will continue to operate business as usual.
“We are excited to partner with Jack and the Vince management team as we expect to mutually benefit from the strength of the Vince brand that has been developed over the past 20 years,” Authentic founder, Chair and CEO Jamie Salter said in a statement. “The addition of another luxury brand to our formidable portfolio is timely as we see demand for luxury goods growing in key markets around the world.”
The Why
For Vince, it’s facing challenges not uncommon for many fashion brands.
It’s also been taking proactive steps to rid itself of excess inventory and narrow its focus on its namesake business by winding down its Rebecca Taylor label. The deal with Authentic is another step in that strategy.
Vince Holding during its fiscal year ended Jan. 28 saw net sales rise 10.8 percent to $357.4 million, with the namesake business leading the increase.
Vince Holding’s net loss widened to $38.3 million, compared to a net loss of $12.7 million in fiscal 2021.
The company did not provide financial guidance, but both Schwefel and Levy said during Monday’s call macroeconomic pressures are expected to continue impacting the business this year.
The deal with Authentic lets Vince focus on operations.
“While leveraging our new agreement with a world class licensing partner in Authentic, we believe this partnership will allow our teams to focus on our core ready-to-wear assortment for both women’s and men’s and build on our profitable domestic wholesale business while focusing on the execution of our key near-term strategic growth initiatives,” Schwefel said.
That includes loyalty and conversions online to expand its customer base, growing the company’s footprint internationally, building out the men’s business and opening new U.S. stores.
Men’s accounted for less than 20 percent of Vince’s fiscal 2022 revenue, with the goal to grow it to 30 percent over the next four years. The company’s testing men’s-only stores, the first of which opened this month in Long Island.
“With an improved balance sheet in place, we will be in a better position to focus on our near-term growth initiatives and to capitalize on opportunities that may arise to drive long-term success and stakeholder value,” Schwefel said.
Authentic on a Roll
Authentic, started in 2010 by Salter, has grown rapidly, in some cases swooping in to buy struggling businesses with brands that still have strong enough equity to not only continue operations but also grow.
Today, Authentic’s portfolio of brands totals more than 40 and includes Barneys New York, Forever 21, Herve Leger, Juicy Couture, Lucky Brand, Brooks Brothers and Nautica.
Authentic’s appetite goes beyond just a focus on luxury.
Earlier this month the company said it struck a definitive agreement to acquire Huntington Beach-based Boardriders, which would give it control of some of the largest surf and skate brands globally.
The deal is valued at about $1.25 billion and would clear Boardriders of its outstanding debt, according to Moody’s Investors Service. The ratings agency said Boardriders generated revenue of roughly $1.8 billion for the year ended Jan. 31.
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