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Towerbrook Capital Partners LP has completed its $835 million acquisition of True Religion Apparel Inc. and installed a tested marketing executive as the brand’s new chief executive officer.
This story first appeared in the July 31, 2013 issue of WWD. Subscribe Today.
David Conn, president of VF Corp.’s Retail Licensed Brands Group since 2009, will take the reins as ceo immediately. Lynne Koplin, president of the company for the past two years and interim ceo since the departure of founder Jeffrey Lubell in March, will assume the new post of chief merchandising officer.
At VF, Conn put together an exclusive licensing deal for the Rock & Republic brand with Kohl’s Corp. His prior experience includes two separate tenures working with Neil Cole, most recently at Iconix Brand Group Inc. and earlier at its predecessor company, Candie’s Inc., and the establishment of the Kohl’s exclusive rights to the Candie’s name.
His background notwithstanding, he insists he’s not looking to transform True Religion’s business model.
“True Religion is a very strong brand with a very well defined business in the market and a business model that doesn’t really require tweaking,” Conn told WWD. “We’re going to focus on e-commerce and digital and growing as a multichannel brand. We have great relationships with some of the best retailers in the U.S. and around the world and we are looking to build on those partnerships, too.”
Eric Bauer, who was chief operating officer of Children’s Place Retail Stores Inc. until June 2012 and previously executive vice president of brand operations and chief operating officer of Gap North America, has been appointed to the dual role of chief operating officer and chief financial officer of the Vernon, Calif.-based premium denim brand. Pete Collins, True Religion’s cfo for the past six years, will retire.
Conn reports to Andrew Rolfe, managing director of TowerBrook, who will become chairman of True Religion. The company agreed in principle to be acquired by TowerBrook for $32 a share in May following a seven-month evaluation of strategic alternatives. In March, Lubell was told his contract, due to expire in June, wouldn’t be renewed and he subsequently left the firm.
Rolfe commented, “The team we’ve brought together, led by David’s strong leadership and vision, will enable True Religion to accelerate its growth and realize its potential, both in the U.S. and internationally.”
Conn said other executive appointments will be forthcoming. The stock ceased trading on the Nasdaq with the close of the markets on Tuesday.
Conn moved to VF from Iconix in 2009, prior to VF’s 2011 acquisition of the trademarks and related intellectual property of then bankrupt Rock & Republic for $57 million. VF later that year struck a deal with Kohl’s Corp. in which the midtier retailer had exclusive rights to the brand, with VF producing the denim and Kohl’s much of the rest of the assortment.
As he prepared to relocate from New York to True Religion’s headquarters in Vernon, Conn wasn’t ready to lay out his vision for the firm. “But I wouldn’t be here if I didn’t think there was an opportunity for this brand to be much more than it is today,” he added. “We’re going to look at all those opportunities in time.”
He said the company would be appraising its marketing plans over the next 90 to 120 days and also evaluating its sourcing strategy. Under Lubell’s leadership and since his departure in March, True Religion has had its jeans produced by contract manufacturers in the Los Angeles area and has prominently identified them as “Made in the USA.” About 20 percent of its merchandise outside of jeans is produced domestically.
“We have a core customer who’s extremely loyal to our brand,” said Conn. “It’s a younger customer with some disposable income who, in the U.S., is a bit more concentrated on the East and West coasts.”
The business also has a sizeable retail component — with 90 full-price and 40 outlet stores in the U.S. and another 33 outside the U.S., 23 of them full-price. Last year, the U.S. consumer direct business generated $291.6 million, or 60.3 percent, of the company’s $467.3 million in revenues. U.S. wholesale accounted for 21.2 percent, or $99.2 million; international for $83.8 million, or 17.9 percent, and core services for the small remainder. Overall revenues last year rose 11.3 percent, with U.S. consumer direct up 12 percent, U.S. wholesale up 15 percent and international up 6.1 percent. Net income rose 2.3 percent to $46 million.
In the first six months of this year, net income is down 56 percent, to $8.9 million, on a 12.1 percent rise in revenue, to $237.4 million.
The business is also well balanced by gender, with about an even split and the mix most recently shifting toward men’s. Lubell made strengthening the women’s assortment a priority prior to his departure. Jeans prices at its own full-price stores averaged $243 in 2012, down from $255 in 2011 as premium goods have become more competitive in recent seasons.
TowerBrook in May took a majority stake in French lifestyle brand Kaporal. Its biggest investment in the fashion space previously was the 2007 investment in Jimmy Choo, which it sold four years later for 549 million pounds, or about $890 million, about triple what it paid.