William L. McComb’s pitch for Lucky Brand includes an emphasis on outlets and big and tall — and an even bigger price tag.
McComb, chief executive officer of Fifth & Pacific Cos. Inc., is working to spin off Lucky and Juicy Couture to help fund Kate Spade’s growth.
Lucky is drawing more interest. First-rounds bids for the brand were due Tuesday, according to financial sources. The outline of the brand’s prospects is said to include an emphasis on its outlet business and a push in the big and tall arena.
McComb is said to be looking for northward of $400 million for Lucky. That has struck some close to the process as a high price tag. A sale price of $400 million would give the company a multiple of 11.5 times adjusted earnings before interest taxes, depreciation and amortization of $34.7 million last year.
Multiples of more than 10 times EBITDA are generally reserved for companies in their prime and while many would-be buyers see potential in Lucky, at least some are hesitant to give Fifth & Pacific credit for growth that is planned for but hasn’t happened yet.
A number of would-be investors are said to have taken a look at Lucky, including Leonard Green & Partners, Iconix Brand Group Inc. and South Korean retailer E-land. It’s not clear if any of those companies actually submitted bids to Perella Weinberg Partners, which was hired to sell the business, according to sources. Neither Perella Weinberg nor the potential suitors replied to requests for comment Tuesday afternoon.
First-round bids in an auction process are often very tentative and are adjusted later in the process after investors get a chance to meet with a company’s management and learn more about the internal workings of the business.
At the end of 2012, Lucky had 177 full-price stores in the U.S. and abroad and 47 outlet stores. Sales tallied $461.7 million.
Mary Ross Gilbert, a stock analyst at Imperial Capital, has previously said that Fifth & Pacific needs to sell off Lucky and Juicy or take on $100 million in debt to fund plans to accelerate the growth of Kate Spade.
In February, McComb teed up the prospects for Lucky during a conference call with analysts.
“Lucky is now poised for sales growth, having addressed the operations and merchandising and design functions,” the ceo said. “Innovation is now the story fueling growth. This year we’ll have a full-year impact of the plus-size launch. The reconceived outlet product will deliver all year. We launched our kids’ license for spring, and we’ll launch our new handbag license in the fall.”
The company was also looking to move into six international markets during the third quarter and expand its offerings as well, adding more women’s tops and introducing two “new major denim initiatives for 2013.”
Lucky’s comparable-store sales, which rose 3 percent in the fourth quarter, are slated to expand by the mid- to high-single digits this year.
McComb told Wall Street that the comp-sales projection was supported by numerous initiatives. “It’s the initiatives that the team has in place on tops,” he said. “It’s the launch of handbags in the back half. It’s the addition of kids to the business, which is largely [e-commerce based], but in more than a dozen stores right now, and expanding to two dozen by the back half. And those things are productivity boosters.”
Investors have been clamoring for Fifth & Pacific to focus on Kate Spade, which is seen as its strongest growth vehicle with a base in accessories and significant potential abroad.
Breaking: @cushnieetochs’ co-founders @carlycushnie and @ochsmichelle are parting ways. After a 10-year run, Ochs is leaving the brand. Get the full story on WWD.com – link in bio. #wwdnews #wwdfashion
@maybelline’s Kanako Takase had snow bunnies in mind when creating the beauty look for @philipppleininternational. Playing off of the bedazzled snowboards in the collection, Takase mixed two highlighters together for a luminous sheen. #wwdbeauty #nyfw (📷: @jilliansollazzo)
“There’s a huge gap between the old way of doing things and today. It takes the youth to help evolve that. You have to count on the kids today to help lead you into the future. A lot of these retailers are stuck in the past. Communication is the biggest thing,” said @ronniefieg of @kith on the youth’s role in retail. On Monday night, Jeff Staple moderated a keynote session with Fieg and @syresmith at Assembly - a series of workshops, talks and keynotes addressing topics or issues in the apparel industry. Head to WWD.com to read more advice from Fieg and what Smith thinks of his dad @willsmith’s Instagram account and sustainability (📷: @weston.wells)
@joansmalls closed the @michaelkors fall 2018 show in black sequined pants and a varsity T printed with 19 on the front and 81 on the back. 1981 – the year Kors went into business. #wwdfashion #nfyw (📷: @giovanni_giannoni_photo)
“You think your life is going to be a certain way, and nothing you thought would happen ends up happening. Never in my wildest dreams did I think I’d be designing clothes and working with Mickey Drexler, and building something I’m deeply proud of,” said Jenna Lyons. Nine months after leaving @jcrew, Lyons is exploring the meaning of happiness. Read the interview, where Lyons talks about reinvention and more on WWD.com – link in bio. #wwdfashion (📷: Farrell) #jennalyons #jcrew