LOS ANGELES — Denim pioneers Jerome Dahan and Adriano Goldschmied believe in the power of two.

In a bid to boost their international business and combine their technical prowess amid waning momentum in the U.S. premium denim market, Dahan's Citizens of Humanity has acquired Goldschmied's GoldSign for an undisclosed sum.

Joining Citizens as a partner and executive vice president of product development, Goldschmied will continue to design GoldSign as a separate brand. Dahan will remain chief executive officer, president and designer of Citizens.

GoldSign, the smaller of the companies, has led the denim pack with innovations such as metallic coating on jeans and stretch leather pants. Citizens is an established business that tallied $90 million in wholesale sales in 2006.

Dahan and Goldschmied estimate the combined company will generate $150 million at wholesale in 2008, up from $120 million combined in 2007.

In addition to acquiring Los Angeles-based GoldSign, Citizens assumed ownership of Goldschmied's washhouse in Vernon, Calif., Laundry Atelier, which Goldschmied spent $1 million to start simultaneously with his label in 2005. Citizens, based in Huntington Park, Calif., has its own laundry that produces runs for as large as 120,000 units. The company said Laundry Atelier will enable it to develop proprietary processes and special dyes in a laboratory-like setting.

"We have enough creativity to separate both brands," said Dahan, 47, noting that the first collection reflecting the shared sources will launch next fall. "The denim industry has been very commercial and is going in the wrong direction. [The deal] will allow us to bring the direction of denim to where it should be."

"The merger of the two companies is giving to both a bigger platform," said Goldschmied, 63. "The consequence is going to be scary for our competition."

As consumers have been opting for dresses and other sportswear instead of jeans costing as much as $300, denim labels are compelled to push the envelope by emphasizing fashion and moving away from the five-pocket jean as a commodity. The deal also indicates the premium denim sector could continue its evolution through a series of mergers, acquisitions or closures. The most prominent example was Greensboro, N.C.-based VF Corp.'s decision announced in July to acquire Seven For All Mankind, also based in Vernon, for an estimated $775 million.Dahan founded Seven in 2000 with Peter Koral and Michael Glasser, before leaving two years later to start Citizens with Glasser in 2003. Glasser now heads his own premium denim label called Rich & Skinny, based in Santa Monica, Calif.

In February 2006, Citizens agreed to a partnership with Berkshire Partners to give the Boston-based private equity firm a 62.5 percent stake in it. The merger of Citizens and GoldSign has reduced Berkshire's stake, said Gary Freedman, Citizens' lawyer who crafted the deal with GoldSign. Declining to reveal the new percentage of Berkshire's holdings in Citizens, Freedman said Berkshire remains a majority shareholder and Dahan and Goldschmied are minority owners.

Freedman said Citizens and GoldSign will develop more products for the Japanese market, where GoldSign has a strong business. Moreover, he said Citizens will open its first office and showroom in Europe in Milan this month, and explore opening another office in Europe.

To continue reading this article...

To Read the Full Article

Tap into our Global Network

Of Industry Leaders and Designers

load comments
blog comments powered by Disqus