NEW YORK — Outerwear company Andrew Marc has completed a recapitalization with financing from GB Palladin, the investment arm of Gordon Bros. Group. Terms were not disclosed.
“It is the right time in our business, and in the world at large, to work with a partner,’’ said Suzanne Schwartz, vice president at Andrew Marc. “Business is riskier these days and you have to expand in different directions….We’re basically one owner and we wanted to share the risk as we move into new categories.”
Andrew Marc does 60 percent of its business in leather and fur, and 40 percent in other fabrics such as nylon and wool. About 55 percent of the business is men’s wear, with 45 percent in women’s. That ratio may change as Andrew Marc expands into new categories.
Mark Schwartz, president of Gordon Bros. Group, who is not related to the owners of Andrew Marc, said, “We are making a major equity interest in the company. With our interests in consumer products companies across the board in manufacturing, wholesale and retail, our knowledge can help [company founder Andrew Schwartz] and Suzanne take Andrew Marc to the next level. They get all the benefits of having a strategic investor and still get to run the company as well as retain a large percentage ownership in their company.”
Mark Schwartz said the opportunity to invest in Andrew Marc is a good one for GB Palladin and met its investment criteria.
“Very few firms maintain the integrity of a brand for 24 years,” he said. “The company has a clean distribution, and great recognition throughout specialty and department stores. We heard they were interested in taking on a partner and there are a lot of opportunities on expanding the brand.”
Andrew and Suzanne Schwartz will run the firm on a day-to-day basis, while GB provides advice on strategies to expand product lines and extend geographically.
Unlike many other private equity investment companies, GB doesn’t have an exit plan for its investment. The financial firm tends to hold on to its holdings long-term, looking more for growth than some competitors that prefer flipping their stakes for a quicker return on their equity holdings. GB Palladin’s past investments include Restoration Hardware, Spencer Gifts and Laura Secord, Canada’s premier chocolate brand and retailer.“GB has good knowledge of retail and apparel, which is unique among financial firms, and they will get to work with a talented management team at Andrew Marc to expand the brand,” said Frederick Schmitt, an investment banker at Los Angeles-based The Sage Group, who represented the apparel firm.
Schmitt said he anticipates more apparel firms to connect with financial and strategic partners.
Suzanne Schwartz disclosed that the first product extension will be in accessories, with a focus on handbags, business cases and wallets. Andrew Marc is developing the plan for the accessories market. It doesn’t have any licensees now, but considers that an option for select products in the category.
She said that the firm’s price points for outerwear are between the mid-price range and luxury, and the addition of accessories could mean a new group of consumers.
Opening retail prices for Andrew Marc are $300 for a nylon jacket and as much as $2,000 for shearling. Wholesale prices are about 40 percent less. Prices at retail for the Marc New York collection start at $150 and run as high as $800, with wholesale 40 percent lower.
The company hasn’t determined what the prices will be for its accessories line, but is banking on the same distribution that the two brands now have. Andrew Marc is sold primarily at Saks Fifth Avenue, Bloomingdale’s and Neiman Marcus. Marc New York can be found in Marshall Field’s, Lord & Taylor, Macy’s and Nordstrom.
Accessories in the Andrew Marc collection is to launch in fall 2006, with Marc New York accessories a year or two later. The company expects to ramp up its staffing during spring 2005 to prepare for the fall launch. After accessories, sportswear is the next possibility on the agenda.
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