NEW YORK — In a small deal presaging potentially bigger developments, NRDC Equity Partners LLC has bought a majority stake in Peter Som Inc. and has high-end retail on its radar.
NRDC has been eyeing other designer brands, with a deal in men’s wear brewing, and is fueling a revival of its trophy acquisition, Lord & Taylor, purchased for $1.1 billion in 2006 from Federated Department Stores Inc., now called Macy’s Inc. The Som deal confirms a report in WWD on Feb. 8.
“We’re very intrigued with high-quality luxury brands, whether they are retailers or designers who could have their own retail stores, among other things,” Richard Baker, chief executive officer of NRDC, told WWD exclusively. “Peter Som is a designer with no stores but could wake up one day with a retail chain of stores — in a short period of time.”
Asked specifically if he was considering a high-end retail acquisition, Baker replied: “We look at everything. We look at all kinds of different things.”
But he emphasized American design talent is where NRDC is “actively” searching. “We are very interested in investing in American designers for a variety of reasons.”
NRDC has already established partnerships and financial arrangements with a handful of American designers, who in some cases will provide product and new lines for L&T and possibly other retailers. NRDC is in the process of creating an entity to manage its growing stable of designer-contemporary businesses. Internally it’s been dubbed Creative Design Studios. The structure is not yet formalized and Baker said he’s seeking a manager to oversee it.
Prior to Som, NRDC established arrangements with contemporary designer Cynthia Steffe, where an ownership interest has been taken. The designer, no longer associated with the label that bears her name, will be providing product for L&T.
Designer Charles Nolan was recently named creative director for the Kate Hill bridge private label line at L&T. Nolan is recreating the label for spring, which will be rebranded by advertising guru David Lipman. This could be a precursor to an investment in Nolan’s business.
In addition, Bryan Bradley was recently named creative director for Bryan by Bryan Bradley, a contemporary line exclusively for L&T launching late this month. Bradley, owner-designer of Tuleh, said he has no plans to sell a stake in his business.
Baker declined to spell out the structure of his designer arrangements for competitive reasons, other than saying, “We are very creative in financially structuring transactions. There will be more to come. NRDC is in the deal business. We sometimes buy things that are big, sometimes they are small. But we are aggressively out making financial partnerships.”
He characterized NRDC as an investment company with roots in real estate pursuing investments in real estate, retail, fashion and manufacturing brands. While honing in on American brands, Baker didn’t exclude going overseas for an acquisition.
The Som purchase was inked Wednesday night after a 10-month process that began with Baker being introduced last November to Som and his collection by Lividini Weisenfeld Partners, a marketing and communications firm that represents NRDC.
“It’s a very simple story,” Baker said. “We met Peter Som and were very impressed with his creativity and the work he has produced. We believe there is a huge future for Peter Som. It has a lot to do with our interest in supporting American designers. Peter Som represents a generation of talent that has become the future of the American fashion industry. NRDC is committed to supporting the industry by investing in and nurturing American brands with tremendous potential for international growth.”
“I’m really excited to have a new financial partner,” Som said. “It relieves the pressures that come with being a totally indie fashion house. We are really focused on continuing to build our current retail distribution, which has been very loyal to us, and continuing to build the women’s line into a true lifestyle brand. We are definitely looking to expand into other areas in women’s products, and home, but for now the growth of our business in women’s apparel is strong and we’re really focusing on that. Essentially, our company is going to be run the same way as it has.”
Som shows his spring collection Sunday afternoon at Bryant Park. He said the collection is architecturally influenced by his visit to the Guggenheim Bilbao in Spain, designed by Frank Gehry. “It’s definitely very feminine, clean and crisp.”
Market sources said NRDC paid about $10 million for a two-thirds interest in Peter Som Inc., which has a wholesale volume of $7 million to $8 million, has been breaking even and is getting closer to profitability. NRDC has a master license agreement with Som, who will remain as creative director. Elixir Advisors, a New York boutique investment bank, represented Som, who in July was appointed creative director of Bill Blass. His first collection for Blass is expected to be for pre-fall 2008.
Som, a graduate of the Parsons School of Design, started designing in 1999 with a small capsule collection and launched his brand in 2001. He designs simple, easy, modern American sportswear that’s classic and feminine with a twist and attracts a Hollywood following. The collection sells at Bergdorf Goodman, Nordstrom, Neiman Marcus, Bloomingdale’s, Harrods and Saks Fifth Avenue, among other stores. “It’s Greenwich with an edge,” said one fashion source.
Elana Posner, ceo of Peter Som Inc. and the designer’s business partner for more than four years, will be ceo of the newly formed company. “It does open a huge amount of opportunity for us and enables Peter to have creative freedom so we can build Peter Som into a lifestyle, luxury brand,” Posner said. “NRDC is providing us with a unique combination of financial support and operational resources with a clear understanding of the potential of the Peter Som brand.”
The deal raises the possibility of further enlarging the Som team, increased marketing, increased distribution and opening stores. With the deal imminent, Posner recently hired Leslie Fleming, a former executive with Badgley Mischka and Neiman Marcus, as vice president and senior director of sales.
One particularly attractive element to the deal was that Som has control over the use of his name even if the partnership ever dissolves. Currently, Som said there are no plans to wholesale his collection to L&T, which sells price points in the better-to-bridge range, a rung under Som’s designer collection prices.
Still, after being queried about the risks inherent in the designer business and its limited consumer audience, Baker cited the possibility that one day Som might create a lower-priced diffusion line for distribution at L&T and possibly other stores, and optimistically said Som could be catapulted into a brand generating hundreds of millions of dollars in volume with expanded offerings and distribution.
He also said that L&T has been trading up, “moving closer to luxury than moderate and building a merchandise mix that’s more similar to Bloomingdale’s and Nordstrom than other stores.” For the past four years, L&T, under the leadership of ceo Jane Elfers, has been remerchandising the business so it’s more focused on the better, bridge and contemporary zones. Eighty-five percent of the inventory represent labels new to the store, and this fall alone, Baker noted, L&T is selling 70 lines it didn’t carry a year ago. In the last four years, 38 poorly performing stores were closed so the chain is now concentrated in the Northeast.
“The business is going very well. Lord & Taylor makes a lot of money. Profits are up. We have made a tremendous amount of progress in the last year,” he said.
Renovations, to the tune of around $250 million, at suburban stores have helped. Flagship renovations are anticipated and being worked out. “We want to make the entire exterior gorgeous,” he said. He offered little else in terms of what’s ahead for the flagship, but it’s expected the interior retail space will be downsized and corporate offices relocated to make room for commercial space to maximize the property’s value.
For fall and holiday, the 47-unit, $1.4 billion retail chain is spending more than $10 million to launch a campaign created by Lipman to help modernize its image and promote the 181-year-old store’s heritage. Ads are on billboards and by the tents at Bryant Park. Shopping bags and boxes have been revamped so they are sturdier and brighter. Mario Testino shot the ads on a Walt Disney back lot in California.