Leonard Green & Partners is closing in on Lucky Brand.
This story first appeared in the December 5, 2013 issue of WWD. Subscribe Today.
Fifth & Pacific Cos. Inc., formerly Liz Claiborne Inc., is expected to reveal a transaction to sell Lucky Brand no later than the end of next week following what had been a stalled process. The company initially was in extended talks with private equity firm Advent International to acquire the brand, although those discussions supposedly ended when second-half projections for the denim company weakened.
While Leonard Green is said to be close to a deal, the transaction is by no means certain. The private equity firm is in competition with two other financial sponsors: Marlin Equity Partners and Golden Gate Capital.
However, Leonard Green could have an ace up its sleeve. The Los Angeles-based private equity firm owns a majority stake in brand management firm Authentic Brands Group, which recently acquired Juicy Couture from Fifth & Pacific. Sources said Authentic is not involved in the acquisition of Lucky Brand. Still, Leonard Green has the benefit of tapping into Authentic’s licensing expertise in identifying possible licensees and business opportunities overseas for the brand in putting together a proposed bid to Fifth & Pacific.
An assistant for one of Leonard Green’s partners said the firm has “no comment at this time.”
Back in May when Fifth & Pacific first started the sale process for Lucky, the company was said to be looking for upward of $400 million for the brand. Since then, the price has dropped to below $300 million, financial sources and investment bankers said.
Those individuals also said the deal will be for at least $250 million. Where the final price ends up depends upon several factors, including any updates on future projections for the denim brand. Also, when the buyer and Fifth & Pacific determine the transaction will actually close is a factor since that will affect who gets the benefit of holiday sales.
Should Leonard Green be successful in its quest for Lucky, it certainly has experience in the fashion and retail space.
The private equity firm either owns or has stakes in BJ’s Wholesale Club Inc., The Container Store Inc., David’s Bridal Inc., J. Crew Group Inc., The Sports Authority Inc., Topshop/Topman Holdings Ltd. and the watch retailer Tourneau Inc. It also had a stake in Neiman Marcus Group.
Leonard Green is also unique among private equity firms, sometimes holding investments for more than 10 years compared with the average holding period for most financial sponsors between the five- and seven-year time frame.
Fifth & Pacific said last month when it posted third-quarter results for the period ended Sept. 28 that Lucky’s sales were up 7.2 percent to $120 million, on a flat comparable-store sales performance.
Following the sale of Lucky and the recent sale of Juicy, Fifth & Pacific will be able to focus entirely on its Kate Spade brand. That business in the third quarter saw revenues expand 76.4 percent to $179.7 million as comp sales from stores and e-commerce jumped 31 percent.