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TOKYO — Fast Retailing said Friday it has agreed to buy an 80.1 percent stake in Los Angeles-based denim and fashion brand J Brand Holdings LLC from Star Avenue Capital and J Brand management for about $290 million plus $10 million in advisory fees.
Fast Retailing, the corporate parent of Uniqlo, has been eyeing potential acquisitions as it bolsters its international presence. The Japanese company has a limited footprint in the U.S., home to just three Uniqlo stores in New York City, one in New Jersey and one in San Francisco.
There was talk that J Brand, known for its colorful jeans and cords, was on the block. WWD reported in September that there were several potential buyers for the brand including PVH Corp., VF Corp., and Warnaco Group Inc.
Fast Retailing said that J Brand is a “highly profitable” company with reported net sales of approximately $124 million for the fiscal year ended December 2011. J Brand sells in more than 2,000 stores in more than 20 countries.
”Our planned acquisition will extend the Fast Retailing Group’s brand portfolio among the affordable luxury apparel category and strengthen our group’s capability in the denim category,” said Tadashi Yanai, chairman, president and chief executive officer of Fast Retailing. “In addition, the acquisition will create synergies between the companies, enhancing the positions of both Fast Retailing and J Brand as fashion leaders.”
Fast Retailing said it expects to close the deal by the end of December, pending regulatory approval. The Japanese fast-fashion giant said that the current management team, led by J Brand chief executive officer Jeff Rudes, will continue to lead and operate J Brand as a Fast Retailing subsidiary.
J Brand’s proposed partnership with Fast Retailing has the potential to generate great expansion opportunities in all major markets around the world,” Rudes said. “We are very proud of the platform we have built together with Star Avenue Capital and its partners, Irving Place Capital and CAA, over the last several years, and we look forward to our next phase of growth.”
Fast Retailing still does the bulk of its business in Japan. The company saw its sales for the year ended Aug. 31 grow 13.2 percent to 928.6 billion yen, or $11.82 billion at average exchange rates for the period. Uniqlo’s Japan operations accounted for 66.8 percent of the total. Uniqlo’s international operations comprised 16.5 percent while the company’s Global brands subsidiary, including Theory, G.U. and Comptoir des Cotonniers, accounted for another 16.5 percent.
Standard & Poor’s credit analyst Makiko Yoshimura said the acquisition will not have a negative impact on Fast Retailing’s financial risk profile and expressed a positive view of the transaction.
“J Brand was only recently established, and its niche position has higher volatility in fashion than casual wear. Nevertheless, the company has solid brand recognition in the U.S. market and maintains good margins. Through the acquisition, Fast Retailing will be able to gain ground in women’s apparel, which the company has been focusing on, while at the same time increasing its footprint in the U.S. market, in our view,” Yoshimura wrote in a release distributed Friday. “In the medium to long term, we believe Fast Retailing’s group brands, such as Uniqlo and Theory, will benefit from J Brand’s knowhow in denim.”