LF USA has purchased handbag firm Van Zeeland Inc. for $330 million.
This story first appeared in the August 14, 2008 issue of WWD. Subscribe Today.
LF USA is a subsidiary of Hong Kong-based Li & Fung Ltd. Van Zeeland, whose brands include Kathy Van Zeeland, B. Makowsky and Tignanello, was founded by the husband and wife team of Kathy Van Zeeland and Bruce Makowsky. Prior to Van Zeeland, the two spearheaded the growth of the handbag line at Nine West.
“There aren’t that many [individuals] out there with the quality of design and management that Kathy and Bruce have,” Rick Darling, president of LF USA, told WWD on Wednesday.
Darling said the acquisition will help expand LF’s nonapparel business, as well as build a strong wholesale business in multiple channels of distribution, with synergies in place from the earlier purchase of the Rosetti handbag business.
Li & Fung Ltd. bought Rosetti Handbags and Accessories Ltd. in July 2006 for $162 million. Rosetti posted sales of $195 million in 2005, the most recent figures released.
According to Darling, Rosetti is sold primarily at midtier and mass stores and has recently entered the department store sector. Van Zeeland is sold primarily in department stores such as Macy’s and Dillard’s, and on QVC.
“We looked strategically at what we can do to get [Van Zeeland] to the next level, and they had a vision to build their company to be the biggest in the accessories business,” Darling said.
Van Zeeland and Makowsky have long-term employment agreements and will continue to run the business from their Manhattan offices. The two will remain as co-presidents of the four-year-old operation, with Van Zeeland continuing as head designer and Makowsky overseeing the growth and direction of the business.
Darling noted Van Zeeland is looking to expand into other product categories, with extensions into jewelry and footwear the next logical step. Darling predicted an expansion into apparel down the road. He added the parties will soon develop a plan over the next six months to roll out new product categories.
The Van Zeeland business currently has an annual volume of $200 million, according to Darling.
“We can support the sourcing for the product, [and] can move as quickly as is appropriate for the marketplace. Product extension can take place very quickly,” Darling said. “Whether business is tough or not at retail, great product sells. We have no plans to hold back on development [projects] due to the current environment. In fact, this is an opportunity to penetrate the market quickly.”
Makowsky said, “The reason we did this deal is because we can use Li & Fung as a platform to make all of our brands [into] lifestyle brands, and to get into all these classifications that we’re not in right now. Our goal is to be the number-one accessory brand in the U.S….We felt that Li & Fung would be our best partner.”
In Hong Kong, Li & Fung Ltd. said first-half profits spiked 18 percent to 1.2 billion Hong Kong dollars, or $161 million at average exchange for the period. Sales rose 25 percent to 47.4 billion Hong Kong dollars, or $6.2 billion.