La Perla, Frette on the Block

Industry executives believe a purchase price would have to be in the $300 million range to justify the investment.

JH Partners has put La Perla Group and Frette Srl on the selling block, according to industry sources.

This story first appeared in the September 24, 2012 issue of WWD.  Subscribe Today.

La Perla produces the upscale La Perla and diffusion La Perla Studio lingerie labels, and Frette is the luxury home accessories, bedding and loungewear brand.

San Francisco-based JH Partners acquired full control of La Perla Group in October 2008, after taking a 70 percent stake in the company in July 2007. At that time, La Perla generated combined retail and wholesale sales of between $230 million and $250 million, but the transaction was valued at close to $400 million because of a heavy debt load, sources said.

Industry executives believe a purchase price for La Perla — or perhaps a La Perla/Frette package — would have to be in the $300 million range to justify the investment.

“JH would have to sell La Perla, and possibly Frette, in the $300 million range. Less than $300 million would be a massive loss,” said one executive who requested anonymity.

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Since 2008, La Perla has restructured its operations, discontinued a number of labels and struck a deal with trade unions and the Italian government in December 2008 that saved the jobs of 250 La Perla workers for a two-year period during the reorganization. But the euro zone crisis and fading regional sales have impacted a number of Italian fashion companies that often rely on business from affluent tourists, mainly from China, Russia and the Gulf region.

Officials at JH Partners, La Perla and Frette could not be reached Friday.

Officials at JH Partners made this statement to WWD Monday: “JH Partners has no intention to sell either La Perla Srl nor Frette Srl. Both companies remain core investments for JH Partners, which continues to actively work on further development of their businesses.” However, JH Partners added that La Perla is open to a financial partnership. “This doesn’t exclude the fact that JH Partners is considering for La Perla the opportunity to share with a financial partner the implementation of the medium-long term strategic plan to help accelerate the growth of the business,” said officials at JH Partners.

In an interview with WWD in November 2008, Jeff Hansen, a partner of JH partners and managing director of La Perla, said, “We started a year ago, rationalizing the brands from 16 to five or six a couple of seasons from now. Most of those brands were developed just for the Italian market. And with every brand comes additional people and marketing. When we acquired the company, there were five or six brands that generated profits, and nine or 10 that generated costs.”

Hansen further noted that by 2013 he projected the La Perla business to be “probably twice as big and profitable as today, with a greater presence in the U.S. and Asia. We’re in the neighborhood of 200 million euros [$158 million] today.”

Meanwhile, Frette was projected to generate combined wholesale and retail sales of $135.8 million in fiscal 2011, up from $124.4 million, in 2010, Hansen told WWD last year.

In addition to international buyers from countries including Qatar and China, the La Perla and Frette businesses would be a good fit for two companies: Delta Galil Industries Ltd., an Israeli innerwear specialist that acquired German underwear-maker Schiesser AG for $85 million in July, and Japanese innerwear, apparel and textiles giant Wacoal Holdings Corp., which purchased U.K.-based Eveden Group for $243 million in April.

But, said one executive familiar with European lingerie brands, “La Perla wants to make a big comeback, and there could be a major French buyer in the mix.”

“La Perla could be acquired by French bra brand Chantelle…The French are buying up all of the good Italian labels.…It might be announced before or at the Salon [International] de la Lingerie fair in Paris in January,” said the source.

The $345 million Groupe Chantelle acquired Thomass’ $8 million business from DB Apparel, a subsidiary of Sun Capital Partners Inc., in June 2011.