NEW YORK — Tory Burch has all the momentum a designer could want — and The Carlyle Group is one of the key players looking to get a piece of it.
The brand has been actively courting new investors since last year, and the buyout giant is said to be a strong contender. No deal, however, is in the immediate future, and Burch shareholders continue to contemplate the alternatives.
The process has been slowed by ongoing tension between the designer and her ex-husband, Chris Burch. And the prospect of a lucrative public offering is lingering, although the company has repeatedly said that’s not in the cards, for now.
Tory Burch is one of the hottest properties in fashion. The business has grown both quickly and profitably, with 72 stores dotting the globe. Swimwear was recently added to wholesale accounts, watches appear to be in the offing and a fragrance is in the works for fall 2013. And counterfeiters are cranking out Tory Burch merchandise — an unwelcome but telling statement of the brand’s global recognition. RELATED STORY: Tory Burch Resort 2013 >>
But now the company appears to be at a crossroads as it plots its future. Many of the suitors are said to be mainly interested in buying a majority of the business. A spokeswoman for the firm said definitively: “We are not selling a controlling stake in the company.”
The company hired Barclays Capital last year and flirted for a time with seeking a strategic investor, holding meetings with firms such as Coach Inc. and LVMH Moët Hennessy Louis Vuitton. The focus now appears to be on financial players.
Washington, D.C.-based Carlyle would be a powerful ally for the company. The problem for Burch: the buyout giant is believed to want a controlling interest, something that no individual party currently has, according to sources. Carlyle, which did not reply to a request for comment Friday, is said to want to pair chairman Tory Burch with a business partner — a Roger Farah to her Ralph Lauren.
A search for a new investor has been complicated by the designer’s strained relationship with her ex-husband, who owns about a third of the company and is working on establishing the C. Wonder chain, as well as a string of other retail concepts. C. Wonder increased tensions between the two sides, with sources contending it bears too close a resemblance to the brand Chris Burch helped his former wife create — an allegation he denies. For months, the industry was atwitter over the potential of a Burch vs. Burch lawsuit over C. Wonder, but so far nothing has come of it.
Observers have noted that anyone buying out Chris Burch’s stake might also be funding a potential competitor. The designer and her ex-husband are said to be trying to reach some sort of a C. Wonder resolution. There is the possibility that the chain, which is new and still developing, could evolve into a format that is not quite so irksome to the Tory camp.
In an interview with WWD in December, Chris Burch said, “I have three amazing children with Tory, she’s a pretty extraordinary person. We’re doing quite well, the business is extraordinary. There’s always tension no matter what when you have a relationship where you’re no longer married, there’s always going to be tension.”
At the time, he said, he was going to sell his stake and move on and that strategic investors, private equity funds and sovereign wealth funds were all interested.
The hiring of an investment bank has opened the door for other Tory Burch investors to exit as well, meaning it is possible that a majority of the firm could ultimately trade hands.
With the sale taking longer than many expected, competing bankers have been circling and looking for a way in. In part, that’s because Tory Burch is a rare commodity: a youngish brand that has proved that it appeals to shoppers worldwide, but still has plenty of room to grow.
“The proof is in the pudding,” said Judith Russell, an independent apparel and retail consultant. “The high-end, very fashionable consumers all think it’s the just the greatest thing and so it is. She was smart to get into accessories first and really get her brand in the forefront of everyone’s mind. The brand equity seems to be worth quite a premium, so I think they’re smart to take their time and make sure the timing is right.”
Chris Burch has been one of the brand’s primary cheerleaders, boasting at first that the company was worth $1 billion, and then $2 billion and more recently $2.5 billion, valuing his stake at about $750 million. While each of those valuations were seen as lofty when they were first floated, the hope, or the fear, is that they might ultimately be too low in the current market.
One source said Tory Burch is more profitable than Michael Kors Holdings Ltd., which held its initial public offering in December and now has a market value of over $10 billion — Michael Kors himself is close to being a billionaire, at least on paper. The Tory Burch brand also is perfectly molded for Wall Street — like Kors, its business comes mainly from accessories, with strong positions at retail in footwear and leather goods. The company also has significant growth potential in overseas markets.
That has made a Tory Burch IPO an all-the-more attractive option for the firm’s early investors.
@tradesy is turning the concept of a showroom upside down with its new space in Santa Monica. Here, the company plans to hold events, art exhibits and a showcase rare fashion pieces like this Louis Vuitton boxing set. Get all the details on Tradesy’s first showroom on WWD.com. #wwdnews
Spotted last night at the @erdem x @hm launch event: Kate Bosworth, Rashida Jones, Kirsten Dunst and Selma Blair. The party, which took place in LA, also marked the opening of their pop-up shop. “I was interested in creating a collection that wasn’t in any way disposable. It was about pieces you’d create and keep forever, things that have a permanence to it,” designer Erdem Moralioglu said. #wwdeye (📷: Katie Jones)
Renee Zellweger in yellow in 2001 and again in 2017. Chosen as one of the 12 @pantone Leading Spring Colors (and dubbed “Meadowlark”), it only makes sense that the bright hue stands the test of time and is making a resurgence this season, seen already on stars like @blakelively and @gigihadid. (📷: Donato Sardello & @rexfeatures) #wwdfashion #tbt
Dior’s 70th anniversary celebration continues with a new exhibition at the Royal Ontario Museum in Toronto. “Christian Dior,” which is scheduled to run through March 18, takes a look at the founders tenure from 1947 to 1057 and feature 40 designs. Pictured here is an evening gown from the Ailée, fall 1948-49 haute couture collection. #wwdfashion (📷: Brian Boyle)
As one of the most recognizable models in the world, Christy Turlington Burns has an insider’s view of the fashion industry and the allegations of sexual harassment swirling around it. “I can say that harassment and mistreatment have always been widely known and tolerated in the industry. The industry is surrounded by predators who thrive on the constant rejection and loneliness so many of us have experiences at some point in our careers,” Turlington told WWD, along with her suggestions for how the modeling world should protect younger women and men. Read more on WWD.com. Link in bio. (📷: Tony Palmieri) #wwdnews
@asics America has tapped a new brand ambassador: famed DJ/record producer @steveaoki. This initiative is intended to set the tone for the new brand identity and philosophy and will include partnerships with influencers and in-store and off-line activations that will continue into next year. This is Asics’ most significant marketing effort in two decades, and is expected to attract younger consumers to the brand. #wwdfashion
24-year-old Jean Prounis is redefining the rules of jewelry. Formerly a studio assistant to Jemima Kirke and a design apprentice at Ghuran, she focuses on handcrafted subtleties and ancient goldsmithing techniques. “There was a really sterile feel in the environment and I wanted to have jewelry with character that shapes how you wear it everyday,” Prounis said. Each piece is hand made in New York, either by Prounis or three other jewelers in the district. #wwdfashion
“These collections continue to build on that vision, empowering differently abled adults to express themselves through fashion,” said @tommyhilfiger of his line of adaptive apparel, which launches today. The line consists of 37 men’s and 34 women’s styles based upon the pieces from the spring Tommy Hilfiger sportswear collection. #wwdnews