Li & Fung Ltd. and its LF USA subsidiary are just getting started.
After disclosing three acquisitions Thursday involving an initial cash outlay of $140 million and a string of licensing agreements, executives told WWD there are more deals in the pipeline.
Among the licensing deals, LF USA is pushing ahead with a new brand-building model inspired by entertainment that calls for the launch of two to five brands a year. It’s also forged a new licensing relationship with Sean John for men’s sportswear, securing a foothold for the sourcing giant in Macy’s stores.
According to Rick Darling, president of LF USA, a new venture with Star Branding focuses on creating lifestyle brands inspired by trends in music, entertainment and sports. Star Branding’s partners include Tommy and Andy Hilfiger, Bernt Ullman and Joe Lamastra. The operations of Star Branding will absorbed by Music Entertainment Sports Holdings, with LF USA holding the majority interest. MESH will operate out of LF USA’s headquarters at 1359 Broadway in New York.
“We’re building brand concepts through the use of great entertainment properties such as in music and sports and celebrities, tying them all together with our mutual connections in the entertainment industry,” Darling said. “The products will be at all retail distribution levels from mass to the better space, and not just the typical T-shirts and tour-type merchandise. MESH is using Tommy’s and Andy’s creative capabilities, with their inspiration from music, for example, along with our sourcing, production and financing expertise.”
He explained that the two to five brand launches planned will feature concepts for both women and men. Those brands could include celebrity involvement where appropriate, and could either be propriety brands for multiple retailers or exclusives for a single chain.
First up will be a rock-inspired denim brand for men and women to be launched within the next 60 days featuring key items across apparel and accessory categories. LF USA is still in negotiations with retailers, Darling said. He said price points are “very affordable and accessible” to consumers. LF USA typically sources for distribution channels from mass merchants to the department stores, and less so for the higher-end luxury tier.
Darling also said LF USA’s capability in the denim market could be enhanced by the acquisition revealed Thursday of Hong Kong-based HTP Group, a denim specialist, by Li & Fung, and that LF USA could potentially be a customer of HTP’s.
In addition to HTP, Li & Fung said Thursday it acquired Jackel Group, a player in the beauty and packaging industries. Bruce Rockowitz, president of Li & Fung, said Jackel’s customer base includes Coty, Elizabeth Arden, L’Oréal and LVMH Moët Hennessy Louis Vuitton, while HTP works with brands that include All Saints, Lee Cooper and Ed Hardy.
Meanwhile, LF USA is making an even bigger push into accessories. The firm said Thursday it acquired the bulk of the assets of Cipriani Accessories Inc. and its affiliate The Max Leather Group. Cipriani will be part of LF USA’s Fashion Accessories Group, which includes Kathy Van Zeeland and Rosetti handbags. Cipriani — specializing in belts, small leather goods and cold weather accessories — has the licenses for Calvin Klein, Michael Kors, Lacoste, Sean John and Nine West. Co-presidents Evan Mittman and Jarrod Kahn, as well as the senior management team, will continue with the day-to-day operations of Cipriani.
“Together, we will leverage LF USA’s infrastructure to help us expand into new accessory categories and add additional brands to our portfolio,” noted Mittman.
Expanding the footwear and accessories categories is a top priority of LF USA’s. “The group is our one-stop shop concept. We are filling in that mosaic and are looking at more accessories acquisitions,” Darling said.
In Hong Kong, Rockowitz echoed Darling’s point about further acquisitions, but declined to elaborate due to the requisite “quiet period” prior to the firm’s release of corporate earnings next month. “We’re working on quite a few things right now,” he said. Li & Fung executives have said in the past that the sourcing giant has up to $1 billion in its war chest to spend on acquisitions.
The New York-based subsidiary also said it entered into a new licensing agreement with Sean John for men’s sportswear, working closely with the Macy’s team, which has the exclusive domestic distribution rights.
“This is really the second part of our forward strategy to continue to build the Sean John brand,” said Dawn Robertson, president of Sean John. “This is an opportunity to partner with someone who has the production capabilities and scale to allow us to grow.”
Sean John’s design and sales employees will transfer to LF USA, leaving a small group of personnel at Sean John who will oversee marketing, licenses and the company’s Fifth Avenue store and nine outlets. These executives include Robertson; Jeffrey Tweedy, executive vice president of brand development and licensing, and creative director Dao-Yi Chow, who will continue to manage the overall look of the brand.
Sean John is the latest in a series of recent licensing transactions by LF USA. In addition to the previously announced pact with celebrity stylist Rachel Zoe to launch a new contemporary collection, the firm expanded its existing licensing deal with martial arts apparel maker Tapout to include men’s and junior’s sportswear.
As for the other licensing deals, Rockowitz said: “We’re always looking to develop our expertise in design.”
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