Sir Philip Green and Leonard Green & Partners have entered into a deal that aims to generate $1 billion in revenue from the Topshop and Topman brands in the U.S., and to double the brands’ worldwide sales over the next three to four years.
A few hours after revealing the sale of a 25 percent stake in Topshop and Topman to LGP in a deal that values the retailers at 2 billion pounds, or $3.22 billion at current exchange, Green, the owner of Britain’s Arcadia Group, sketched out some of his future plans — and talked about why LGP is an ideal partner.
“We’ve got two great brands — Topshop and Topman — and the ultimate plan is very simple: to double their size in the next three to four years. America is going to be a platform and we’ve got sufficient evidence from America that we can really grow this brand if we get behind it,” said Green in an exclusive interview with WWD in the VIP room of Topshop’s Oxford Circus flagship.
“Nordstrom is still very much in our thinking; they’re still in the picture and we’re excited about developing with them. I’m going to Seattle in mid-January to meet with them,” he said, adding that the aim is to do “a billion dollars” in revenues in America in the medium term.
Topshop has 14 in-store locations at Nordstrom and plans to open the first Topshop and Topman stores in Los Angeles on Feb. 14. And he’s still looking to open a second Topshop location in Manhattan.
Referring to his tie-up with LGP, Green said, “They are very, very lovely people and a sophisticated, professional, successful U.S. investor. They own retailers and they know every mall, they know everybody. It saves me guessing. They feel that we can go into at least 50 cities. We’ve never thought like that.”
The U.S.-based private equity firm has a history of investing in the retail sector and its key investments include J. Crew Group Inc., Neiman Marcus Inc., Petco, Whole Foods Market and The Container Store.
According to Green, LGP valued the Topshop and Topman businesses at 2 billion pounds, or $3.22 billion, and agreed with Arcadia that those businesses would take on 600 million pounds, or $966 million, of debt, giving the deal an enterprise value of 1.4 billion pounds, or $2.25 billion.
LGP paid Arcadia 350 million pounds, or $564 million, 25 percent of 1.4 billion pounds ($2.24 billion). Arcadia has decided to carry the 600 million pounds in debt for the immediate future, rather than turn to banks for external financing.
As a result of the deal, Topshop, Topman and the Arcadia Group, which includes the retail brands Miss Selfridge, Dorothy Perkins, Burton, Evans and BHS, have zero bank debt and are in a positive cash position, according to Green.
Going forward, Green said he’s keeping an open mind about acquisitions.
“Being debt free gives us the balance sheet and flexibility to look at other opportunities to consolidate or acquire, either on our own or in partnership with LGP, who have substantial capital available in their new fund.
“Nothing’s ruled in, nothing’s ruled out. We’re happy to look. What we’ve done is given ourselves the perfect platform to do whatever we want to do — buy, sell, swap, consolidate,” Green said, adding that he may use some of the money to buy more real estate.
“Something might turn up today. I’ve got some ideas. LGP has a new fund of $6 billion. We’ve got funds. We have a powerful platform.”
Asked whether he planned to help in any capacity with the other companies owned by LGP — such as J. Crew, which is set to open its first European unit next year on London’s Regent Street — Green said: “We haven’t discussed it. The answer is there’s no conflict. If we can help them generally with something [we will], but it’s not been discussed.”
Green pointed out that Thursday’s deal is a first for both companies: “I’ve never had a financial investor. They’ve never made an investment outside America — and they don’t buy minority stakes.”
He added that the partnership evolved naturally, after about 18 months of friendly chatting.
“This wasn’t a shopping expedition, and I never, ever spoke to anybody else. I have never had a conversation in the financial community. We liked talking to each other and we became friends. We shared the same type of thinking and they were talking to someone who was not financially pressured. We didn’t need to do a deal. And they love the brand,” Green said.
Asked whether he planned to sell further stakes in Topshop and Topman — or even in Arcadia Group — Green said absolutely not.
“I hadn’t even thought about doing this one. It sort of evolved,” he said. “This is not financially driven. I felt they could help us with our growth more safely, without us having to take unnecessary risk in the world we’re living in.”
“What he has done at Vuitton is really exceptional,” said @gameofthrones’ actress Gwendoline Christie on @mrkimjones’ final show for @louisvuitton. “He has rebooted luxury in terms of making it commercial, viable and contemporary. And most importantly artistic. He has never compromised his artistic vision for the sake of commodity.” (📷: @zefashioninsider)
After seeing a demand for men’s wear from its customers, British contemporary women’s wear label @ariesarise has added a men’s wear component and will launch a unisex collection with @mrporterlive. The 20-piece collection includes jackets, denim, logo T-shirts and more with deconstructed ‘90s vibes. Set to launch on January 18, you can shop the pieces on Aries’ website and on mrporter.com. #wwdfashion
“And so spending so much time with a character who thinks like that, inevitability you try and analyze yourself and go back and think about your own demons and dark chapters that you had in your life,” says @thedanielbruhl of his role in TNT’s “The Alienist.” The show, set in the Gilded Age of New York, also stars Dakota Fanning and Luke Evans. Head to WWD.com to read about how 39-year-old Brühl prepared for the role and why he thinks the show is so relevant to today #wwdeye ( 📷: @Eriktanner)
Now that Celine Dion’s collection has topped $10 million in sales, the pop superstar, fashion icon and newly-minted industry player is eyeing growth in Asia. Read the full report by @tiffanyap, link in bio. #wwdnews #celinedion
“My personal philosophy to beauty is paying attention to oneself. I love to be outdoors, lots of fresh air, trying to take care of yourself as best you can. I always notice that comes through,” says Felicity Jones, the global face of @shiseido-owned @cledepeaubeauteus, which launches today. Head to WWD.com to read more about the actress’ love for beauty and how she prepared for her new role in “The Basis of Sex,” playing the young Ruth Bader Ginsburg. #wwdbeauty (📷: @dandoperalski)
Among the familiar faces at @off____white’s show was a surprise figure: Japanese artist @takashipom, pictured here on Wednesday morning. Other show-goers included @jerrylorenzo, who spoke about his upcoming project: a @nike collaboration for back to school, with designs inspired by his childhood on the West Coast. Sitting in the front row were Future, Don Crawley, @miguel and more. See the rest of the photos on WWD.com #wwdeye (📷: Stephane Feugere)
According to @laurentsai, former “Terrace House: Aloha State” cast member, she didn’t know she was auditioning for the Japanese version of “Real World.” “I was telling a couple of my friends and someone’s like, ‘That sounds a lot like Terrace House.’ I was like, ’No it can’t be.’” Turns out, it was. But Tsai isn’t just a reality star — she’s an illustrator who has worked with Starbucks Japan and most recently, she’s dipping her toes into the fashion world. Head to WWD.com to read about her time on the show, modeling and her art. #wwdeye (📷: @danieldorsa)
More changes are coming to New York Fashion Week: Beginning with the spring 2019 collection, @alexanderwangny will move his New York show to June from September, adopting a biannual schedule with collections shown in June and December. Additionally, the @cfda is planning for an official summer/winter fashion season taking place as soon as June and December 2018. Read more about the upcoming changes on WWD.com. #wwdnews #wwdfashion (📷: @slovekinpics)