Most Recent Articles In Financial
Latest Financial Articles
- European Bank Worry Pulls Down U.S. Stocks
- European Stock Markets Fall in Midmorning Trading
- Tokyo Shares Gain
More Articles By
NEW YORK — Everybody’s trying to get Vera to the altar.
The designer appears to be weighing three different options for herself and her company that would greatly expand her growing bridal, ready-to-wear and licensing business and make her a very wealthy woman.
According to sources, Wang is in negotiations with:
This story first appeared in the February 17, 2006 issue of WWD. Subscribe Today.
- Liz Claiborne Inc., the $4.6 million powerhouse that wants to acquire Wang’s entire company.
- Haim Dabah, chairman and chief executive officer of Regatta Pacific Alliance, who’s eager to forge a mega apparel licensing deal between Wang and Kohl’s Department Stores. Regatta would source and produce all the merchandise.
- Richard Cohen, ceo of St. John, who is negotiating with Wang to become the creative director of the Irvine, Calif.-based company. This would be a sideline job for Wang, who would continue to run her own business. The California company would like Wang to be on board in time for its fashion show next month during Los Angeles Fashion Week. St. John officials would like this to be the only deal Wang signs, said one source. Although a deal could fall apart at any time, sources called the talks serious.
While Wang is notorious for taking an enormous amount of time to sign deals and to be a tough negotiator, sources said each of the three parties she is in talks with are looking to wrap up a deal as quickly as possible, and any of the three deals could be finalized within the next several days.
The 56-year-old Wang, who won the CFDA Womenswear Designer of the Year award last June, has seen her star rise in recent seasons as she has successfully segued from being strictly a bridal designer to also doing rtw. Her business, whose apparel and licensed products generate $300 million in retail sales, has been on the upswing as her profile, editorial credits and press have risen considerably.
Since the negotiations with Claiborne are for an outright sale of the company, if that came to fruition, there would be little chance Wang would do the other deals. If she were to go with the other offers, the designer could conceivably sign a mega apparel deal with Kohl’s, while at the same time serving as creative director at St. John and continuing to run her own luxury bridal and rtw business. Sources said she’s weighing the pros and cons and financial windfall of each of the deals currently on the table. Her husband, Arthur Becker, is handling the negotiations on her behalf.
Spokeswomen for Claiborne and Wang said their respective companies don’t comment on rumors. Dabah had no comment, and St. John’s Cohen was said to be in New York and couldn’t be reached for comment.
A Kohl’s deal via Dabah would enable the designer to develop a complete lower-price lifestyle collection — using a derivative of her name — for the department store chain and would be highly lucrative for Wang. Sources indicated Wang could earn as much as $100 million over a multiyear period by signing with Kohl’s.
“I think the Haim [Dabah] deal would be the best for her,” said Allan Ellinger, senior managing partner of Marketing Management Group. “It’s a whole different level of distribution. It’s cool. It won’t say, ‘Vera Wang,’ but will say, ‘Vera Wang for somebody.’ It won’t be confusing for the customer. That customer knows her name through the bridal business. She’s a very aspirational name because of her bridal business. Strategically, it makes the most sense for her. She could maintain her upstairs bridal business and rtw business, and at the same time make product available to a broader audience.”
An exclusive arrangement would be similar to other deals between major retailers and celebrities/designers such as Target’s arrangement with Isaac Mizrahi and Luella Bartley, Kmart’s deal with Thalia and Kohl’s deal with Daisy Fuentes. Wal-Mart, too, has gotten into the exclusive game with apparel lines by Mary-Kate and Ashley Olsen.
Regatta Pacific Alliance is a leading player in bringing together brands and major retailers. It already holds the master license for Daisy Fuentes, sold at Kohl’s — whose products generate more than $200 million in sales, according to industry sources, in addition to its other holdings, such as Donnkenny, which has the license to make nicole by Nicole Miller for J.C. Penney. It also owns the Regatta brand.
“I think [Dabah] has done a great job being aggressive in finding platform brands for retailer end use,” said Andrew Jassin, partner in the Jassin-O’Rourke Group, a consulting firm.
Some observers questioned why Wang, whose high-end business has really begun to take off, would want to have a presence in a moderate department store chain such as Kohl’s, but Wang has long thought her talents could be applicable to many different distribution tiers.
A potential drawback of selling outright to Claiborne is that Wang would lose control of her company and would have to work for — and answer to — someone else. Some observers wondered whether Wang would choose to go with Claiborne since Charron is getting ready to retire at the end of the year. There’s a big question mark over who will lead the company once he leaves, and the new leader might not be as supportive of designers as Charron is.
Another question mark is that Wang doesn’t have a proven track record in sportswear, so Claiborne would not be getting a proven sportswear star. Still, it would be getting a premier bridal designer with an A-list following; a small, but growing rtw and dress business, and a developing licensing business in such categories as fine jewelry, fragrances, intimate apparel, furs, china and crystal. But Charron is not known to overpay for any of his acquisitions and wouldn’t throw money Wang’s way just for the kudos of owning a high-profile, marquee designer name and going to major fashion shows. (Incidentally, both Charron and Trudy Sullivan, president of Claiborne, were spotted in the front row at Wang’s fashion show last week, seated next to Arthur Becker.)
However, Wang’s business could benefit from Claiborne’s infrastructure, as well as sourcing and production capabilities, and its tremendous clout with department and specialty stores. Claiborne could give Wang the vision and support she needs to take her business to the next level.
“Claiborne can get you into businesses very quickly and has a lot of leverage,” said one observer. In addition, Claiborne is well known for giving designers enough room to express themselves.
Sigrid Olsen, whose business was acquired by Claiborne in 1999, has flourished under the group’s auspices. Although she hadn’t heard about any negotiations between Claiborne and Wang, Olsen believes Claiborne gives designers a lot of creative freedom.
She said that, since being acquired by Claiborne, “so many doors have opened.” She praised Claiborne’s production capabilities and noted the company has opened 50 freestanding stores. “They’re definitely supportive in a creative way,” she said.
Since joining Claiborne in 1995, Charron has taken an unconventional approach to building the firm. He took a mature company, rebuilt the model into a multibrand $4.6 billion giant and managed to leave the creative DNA of each brand intact. “I don’t have to be a creative,” he said in a WWD story earlier this week. “I’m an effective executive because I understand what I call the thriving forces. I believe in a responsive environment where creativity can flourish.”
In addition to Sigrid Olsen, other Claiborne acquisitions over the past several years have included Ellen Tracy, Juicy Couture, Lucky Brand and C&C California.
In the last few months alone, Claiborne has purchased Westcoast Contempo and Mac and Jac Holdings for $23.6 million, and Prana for $34.4 million.
Last month, Claiborne was outbid for J. Jill, which Talbots Inc. acquired for $24.05 a share, or $517 million in cash. At the time, Charron said: “We are disappointed that we were unable to acquire J. Jill at a price that makes sense for our shareholders. However, we are financially disciplined and will not overpay.”
Meanwhile, last week, Claiborne announced it planned to eliminate 500 positions within the company and reevaluate about 20 retail locations.
Regarding a potential Claiborne acquisition of Wang, Laurence C. Leeds Jr., chairman of Buckingham Capital, said: “It makes sense to me. Anybody who acquires Vera Wang would be acquiring the best. She’s a very talented, thoughtful and creative designer, and the name has grown in stature with her expanding product. Hers is a name that can become a major brand with international appeal. Liz Claiborne has the financial and managerial assets to achieve that.”