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NEW YORK — John Varvatos has found a new home at last, with a parent that expects to substantially grow the label domestically and internationally.
This story first appeared in the March 9, 2012 issue of WWD. Subscribe Today.
On Thursday, Lion Capital LLC signed a definitive agreement to acquire a majority stake in John Varvatos Enterprises from VF Corp. for an undisclosed sum. Designer John Varvatos, who had a 20 percent stake in the brand under VF, will retain a minority share of the company at London-based Lion Capital as well. Lion’s other investments in the fashion arena include Jimmy Choo, American Apparel and AllSaints Spitalfields.
The transaction is expected to close during the second quarter of 2012.
Lyndon Lea, a partner at Lion Capital, told WWD, “We look at a lot of brands, and we’ve been very selective. But we believe this brand has legs and the ability to be expanded. We’re extremely excited to add momentum to this brand and bring it to a broader reach.” Although Lea acknowledged that his company needs to “understand the brand in more detail, we see it being four to five times the size it is today. That’s not unrealistic.” He said Lion expects to meet those lofty goals by “further penetration in the U.S.” as well as by capitalizing on the “huge opportunity on the international level, particularly in Europe and the Far East.”
Since being acquired by VF as part of its 2003 purchase of Nautica, the Varvatos men’s wear brand has struggled for attention. In fact, The Greensboro, N.C.-based behemoth has reportedly been shopping the Varvatos brand around for at least the past two years.
Varvatos’ annual sales are not revealed, but the brand had “double-digit revenue growth” last year following 10 percent growth in 2010, according to the VF annual report, when it also posted a “positive operating margin as compared with operating losses in all prior years.” A VF spokeswoman said the label was also profitable in 2011.
“It was important to us that the John Varvatos brand’s new partner had the experience to continue to support John’s exceptional vision and the brand’s growth potential,” said Eric Wiseman, chairman, president and chief executive officer of VF.
Varvatos, who declined to provide a volume figure for his label, said, “We’re small, but we’re gaining momentum.” He said sales at retail exceeded $200 million in 2011.
“The business is superstrong in wholesale, retail and licenses,” he said in an interview. “We’re experiencing record growth, but there’s still a lot of work to get to.”
In addition to the John Varvatos luxury collection of tailored clothing, sportswear, footwear and accessories, the company offers the Star USA line of more moderately priced apparel and accessories. The label is sold at 10 company-owned stores around the U.S. as well as at upscale department and specialty stores, including Neiman Marcus, Barneys New York, Bloomingdale’s and Nordstrom. The brand is also sold internationally at Harvey Nichols, Holt Renfrew and Harry Rosen.
There are licenses for fragrance, tailored clothing, footwear, dress shirts, neckwear and accessories. Varvatos said he is “very close” to inking a home license and an underwear deal is not far behind.
He said returning to the women’s business is also a possibility — the brand had dabbled in women’s wear, but it was discontinued in 2005.
Lea said what most appealed to him about the Varvatos brand is its product offering. “It first starts with product, and John Varvatos stands out in a crowded marketplace.”
He believes the aesthetic of the brand will be particularly successful in China.
The apparel is distributed in 16 countries; the fragrance, which is produced by Elizabeth Arden, is in 25, and the footwear collaboration with Converse is in “even more,” Varvatos said. “We have our toes everywhere.”
Under Lion, the existing Varvatos team will be retained, and its headquarters will remain in New York City. Varvatos will continue as chairman and chief creative officer, Robert J. Wichser will remain as president and chief executive officer and Don Witkowski will continue as vice president of merchandising.