NEW YORK — Jones Apparel Group has acquired a 50 percent stake in Rachel Roy, giving the $3.85 billion apparel giant a long-desired entry into the high-end contemporary market and providing the small design house with vital operational backing.
The fashion company's founder, Rachel Roy, will continue to design and produce the line, with the same 18 employees, in her showroom at 148 West 37th Street here and in the same factories. But with financing from Jones, the three-year-old label will be able to expand beyond its current collection into additional categories, with possibilities including fragrance, footwear, accessories, home and — closer to the designer's heart — a more affordably priced line. Expanding globally and opening freestanding stores are also on the to-do list.
"So many different areas of growth excite me," Roy said. "Having a partner like Jones that is willing to support us is like getting a big brother or family member."
The deal creates a three-way venture between Rachel Roy, Jones and TSM Capital, which acquired a significant minority stake in Rachel Roy in November. Jones will assume operations of the existing designer collection business under license and also will market the line.
Jones, a predominantly mainstream vendor that owns Nine West and Anne Klein, has been looking to invest in the contemporary arena for years, but the high multiples that hot market had demanded were cost prohibitive.
The terms of the deal were undisclosed, but "there wasn't a big exchange of money here," said Jones chief executive officer Wesley R. Card, "but we all have a share in the potential upside of this business."
The result is a lot of industry veterans focusing their attention on the young line. On the side of the Roy company, there is the designer herself and her husband and co-founder, Damon Dash, as well as Stephen L. Ruzow, who has been consulting for the brand. From TSM, there are co-founders Marvin Traub, Mortimer Singer and Aslaug Magnusdottir. From Jones, Susan Metzger, ceo of Jones' women's wholesale sportswear division, will be responsible for the operations of the business.
"When I first got into designing Rachel Roy, I was given this platform by Damon to work on my dream," said Roy, who started her career as an intern at Rocawear. "And no matter how hard I worked, I loved it and never felt the pain — Damon felt all of that."Her husband rubbed his jeans pocket and said, "Wallet shock," shaking his head.
Card rubbed the pocket of his own suit pants instinctively and joked, "I'm worried now."
Roy joined Rocawear fresh out of college, and rose to become creative director of Rocawear's women's and children's lines. While at Rocawear, where she met her husband, she launched her own label in spring 2005. When they both left later that year, the couple kept ownership of the Rachel Roy business, which was initially launched as a contemporary collection before changing tiers to become a young designer line with prices about 40 percent higher.
"Rocawear was a quick flip for me, but we couldn't exploit this brand," Dash said. "We had to protect it."
Retailing from about $650 to $2,995, sources put the collection's sales volume at around $10 million. The line is sold in more than 60 doors in the U.S., including Bergdorf Goodman, Neiman Marcus and Saks Fifth Avenue, and 40 doors worldwide, making international more than a fifth of the company's business. Door expansion, particularly globally, will be one of Jones' first priorities.
"In only about three years in the design business, Rachel has made a great business," Traub said. "Having a partner like Jones will bring it to the next step. It can be as big as a major global design business can be."
Although Dash is campaigning for a men's line, Roy, who just gave birth to a daughter a month ago, vetoed that idea as "last on the list." The closest category expansion to Roy's heart is creating a more affordable collection — one of Jones' specialties. Roy said she plans to use the vendor's resources to research and decide what segment of the market will be the best point of entry for a diffusion line.
"There's a whole world of women who love fashion and it should not be exclusive to women who can afford a $1,500 dress," Roy said. "A lot of my life I couldn't afford to spend that, and my friends and family still can't."
Roy said that after her first appearance on "Oprah," she received about a million e-mails."A lot were positive, but a lot said how they couldn't afford it," the designer recalled. "The second time I went on, I didn't even talk about the product because most of the audience couldn't afford it. There was such a disconnect, which I felt was unfortunate. It's really important to me to make a line more women can afford, but just as important is doing it right."
@tradesy is turning the concept of a showroom upside down with its new space in Santa Monica. Here, the company plans to hold events, art exhibits and a showcase rare fashion pieces like this Louis Vuitton boxing set. Get all the details on Tradesy’s first showroom on WWD.com. #wwdnews
Spotted last night at the @erdem x @hm launch event: Kate Bosworth, Rashida Jones, Kirsten Dunst and Selma Blair. The party, which took place in LA, also marked the opening of their pop-up shop. “I was interested in creating a collection that wasn’t in any way disposable. It was about pieces you’d create and keep forever, things that have a permanence to it,” designer Erdem Moralioglu said. #wwdeye (📷: Katie Jones)
Renee Zellweger in yellow in 2001 and again in 2017. Chosen as one of the 12 @pantone Leading Spring Colors (and dubbed “Meadowlark”), it only makes sense that the bright hue stands the test of time and is making a resurgence this season, seen already on stars like @blakelively and @gigihadid. (📷: Donato Sardello & @rexfeatures) #wwdfashion #tbt
Dior’s 70th anniversary celebration continues with a new exhibition at the Royal Ontario Museum in Toronto. “Christian Dior,” which is scheduled to run through March 18, takes a look at the founders tenure from 1947 to 1057 and feature 40 designs. Pictured here is an evening gown from the Ailée, fall 1948-49 haute couture collection. #wwdfashion (📷: Brian Boyle)
As one of the most recognizable models in the world, Christy Turlington Burns has an insider’s view of the fashion industry and the allegations of sexual harassment swirling around it. “I can say that harassment and mistreatment have always been widely known and tolerated in the industry. The industry is surrounded by predators who thrive on the constant rejection and loneliness so many of us have experiences at some point in our careers,” Turlington told WWD, along with her suggestions for how the modeling world should protect younger women and men. Read more on WWD.com. Link in bio. (📷: Tony Palmieri) #wwdnews
@asics America has tapped a new brand ambassador: famed DJ/record producer @steveaoki. This initiative is intended to set the tone for the new brand identity and philosophy and will include partnerships with influencers and in-store and off-line activations that will continue into next year. This is Asics’ most significant marketing effort in two decades, and is expected to attract younger consumers to the brand. #wwdfashion
24-year-old Jean Prounis is redefining the rules of jewelry. Formerly a studio assistant to Jemima Kirke and a design apprentice at Ghuran, she focuses on handcrafted subtleties and ancient goldsmithing techniques. “There was a really sterile feel in the environment and I wanted to have jewelry with character that shapes how you wear it everyday,” Prounis said. Each piece is hand made in New York, either by Prounis or three other jewelers in the district. #wwdfashion
“These collections continue to build on that vision, empowering differently abled adults to express themselves through fashion,” said @tommyhilfiger of his line of adaptive apparel, which launches today. The line consists of 37 men’s and 34 women’s styles based upon the pieces from the spring Tommy Hilfiger sportswear collection. #wwdnews