While the stock market awarded Guess Inc. on plans to sell a majority stake of its intellectual property to Authentic Brands Group, Vogue Business ran an article proclaiming an incoming denim museum wants to save the Los Angeles fashion industry.
The latter is so arrogant a statement it need not be analyzed. However, two announcements related to Los Angeles’ denim industry on the same day makes for interesting timing. One statement proclaims the industry troubled, while the sale symbolizes a big industry shift.
After Guess received an offer in March from brand management firm WHP Global, Authentic Brands Group swooped in with a sweeter deal: $16.75 per share. The deal valued Guess at $1.4 billion value.
Authentic Brands, a New York brand management firm that’s rapidly scaled by purchasing ailing brands before going on a licensing tear, will own 51 percent of the Guess IP. Founders Paul and Maurice Marciano, along with Paul’s son Nicolai Marciano and Guess Inc. CEO Carlos Alberini, will own the remainder.
“We’re confident Authentic can help take Guess to the next level of growth and value creation,” Paul and Carlos said in an email sent to employees on Wednesday discussing what the deal means.
Authentic has a portfolio of more than 50 brands, including Reebok, Juicy Couture, Brooks Brothers and Champion.
Paul, on Instagram, called the move representative of the “next Guess decade” and “endless possibilities of freedom!!” Meanwhile, Nicolai referred to the deal as a “new chapter” in his own Instagram post.
One could call the past 16 months life-changing for Guess with its first-ever acquisition in Rag & Bone. It then received the purchase offer from WHP and, now, will sell a portion of its IP to Authentic Brands.
Marcianos and L.A.
The Marcianos, like the Azria family, are legacy names in Los Angeles fashion. The deal in some ways signals a changing of the guard as space is made for new names.
To be clear, the Marcianos aren’t leaving Guess. They will still manage the day-to-day business. Meanwhile, Paul, Maurice, Nicolai and Alberini own the entirety of the operating company. This includes the stores and inventory. That’s the priciest portion of any business and one of the reasons Authentic has ascended as rapidly as it has: It’s asset light.
The deal seemed surprising, given Guess appeared to be barreling down a multi-brand path last year with Rag & Bone. There was also the launch of Guess Jeans, which was spearheaded by Nicolai and aimed at making the Guess name relevant to a new generation.
For several quarters, management told analysts they were creating this platform using their licensing and manufacturing expertise gleaned from 44 years in business.
In fact, the two newest arms of the company were driving its growth, leading to the question of why sell at all?
It could be that they wanted to take the company private, much like the Nordstrom family, and needed help raising sufficient funds to do so. Otherwise, it seemed Guess was doing just fine on its own.
Avoiding Boardriders’ Same Path
Paul and Alberini assured employees in their email they do not expect changes in the workplace. In other words, business as usual as management works to close the deal, which is expected sometime early next year.
Currently, Paul holds 37.3 percent of the company’s shares, according to the company’s filing with the Securities & Exchange Commission. Maurice owns 9.5 percent, while Alberini holds 4.5 percent. Nicolai’s stake is 0.1 percent.
That the founders, the next generation of the founding family and its current CEO are expected to remain post-sale could be comforting to employees.
It preempts the possibility of the business going down another path akin to the former Boardriders group. That was the company that owned some of the largest surf and skate apparel brands in Quiksilver, Billabong, Roxy, DC Shoes, RVCA, Element and others.
The Quiksilver and Billabong conglomerates both consolidated into one another under Oaktree Capital Management amid flagging sales, before the entirety of the business – intellectual property and operations – was sold to Authentic Brands in September 2023. Moody’s reported a sale price of $1.3 billion.
The bulk of the Boardriders’ brands licensing and operations then went to a Costa Mesa company called Liberated Brands. Liberated stumbled under the weight of supply chain delays, changes in consumer buying trends and high costs.
In February, the company filed for Chapter 11 bankruptcy to wind down its business, while the brands were ushered once again to new licensees.
Be First to Comment