NEW YORK — Cultivating Theory into a global brand has been a goal for Andrew Rosen since he and Elie Tahari started the company in 1997, and the contemporary brand’s sale to two Japanese companies Tuesday is a major step toward achieving...
NEW YORK — Cultivating Theory into a global brand has been a goal for Andrew Rosen since he and Elie Tahari started the company in 1997, and the contemporary brand’s sale to two Japanese companies Tuesday is a major step toward achieving that goal.
Link International, Theory’s Japanese licensee, and Fast Retailing Co. Ltd. — the multibillion-dollar retailer and owner of the 590-unit Uniqlo brand in Japan and the U.K. — have each purchased a 44.5 percent stake in Theory. The remaining 11 percent is held by Rosen, while Tahari has sold his stake in the firm.
Details about how much the Japanese companies paid for the brand were not disclosed.
“It was a very friendly sale, like we were selling it in the family,” said Tahari, but minus the family discount, he quipped.
Link International founder Ricky Sasaki had pursued Rosen and Tahari over the last year-and-a-half to acquire the company. Sasaki, who now holds the post of chairman and chief executive officer of Theory, was originally the brand’s sourcing agent in Hong Kong and became its Japanese licensee in 1998. Sasaki and Rosen have known one another for the past 20 years, Rosen said.
“Link is strengthening its business franchise by acquiring Theory,” said Sasaki in a statement. “We see attractive growth potential in Europe and Asia, further growth in the U.S. and Japan, and the potential for new product lines in the future.”
Also included in the acquisition is Kulson, the contemporary sportswear line that former Theory vice president and head designer Lisa Kulson started with Rosen last year. Kulson is expected to generate roughly $12 million in combined first-year sales in the U.S. and Japan.
Theory, on the other hand, has grown into a $200 million brand since it was founded seven years ago. It was created as a line made entirely of stretch fabrics in clean, modern silhouettes and evolved into one of the top contemporary brands. The line’s dedication to innovative fabrics, versatile styles and high-quality construction have been its signature.
“In terms of where I see Theory in the future, it’s not so different from where we have been,” said Rosen, who will continue in his role as president and chief operating officer. “That [view is] shared by our Japanese partners. One thing that is attractive to Fast [Retailing] is the opportunity to grow a business in the U.S.”The Theory design team will remain intact and its office and showroom space will remain at 1114 Sixth Avenue in Manhattan. In addition, the brand’s sourcing strategy will not change. Currently, about 35 percent of Theory product is manufactured in the Far East, while the rest is made in the U.S. and Europe.
As for where he sees the most potential growth for Theory, Rosen said the brand has had limited distribution in Europe and Southeast Asia, though he added that, comparatively, they’re smaller markets than the U.S. and Japan. Currently, Theory is available at Harvey Nichols, Selfridges and Harrods in the U.K., Le Bon Marché department store in France and Theresa in Germany.
However, with the goal of going global and Fast Retailing’s experience in retail, more Theory shops could sprout up. Over the last year in the U.S., the company has opened freestanding Theory boutiques in Manhattan, Philadelphia, Southampton, N.Y., Greenwich, Conn., Boca Raton, Fla., and San Jose, Calif. Currently, there are 53 boutiques in Japan and Hong Kong — about a dozen of which are freestanding stores.
“I clearly think that in foreign countries, there is a huge opportunity in developing our own retail strategy,” said Rosen. “In the U.S., our product lines currently are sold in a fairly limited number of department stores and we do not see greatly expanding our distribution in [those types of] stores. But there is an opportunity for expansion of retail beyond where we are.”
Rosen said Theory sales are up 35 to 45 percent in stores such as Barney’s, Saks, Bergdorf Goodman and Neiman Marcus, while overall, the brand is ahead of last year by about 28 percent.
With his stake in Theory now sold, Tahari said he’ll focus entirely on his namesake business.
“For me, Elie Tahari is what I’m concentrating on,” he said, noting he’s launching an Elie Tahari men’s line next fall, as well as a new line being designed by his wife, Rory. “This was very emotional for Andrew and me. It’s been seven incredible years together. I feel I have grown tremendously.”Tahari is also a partner with Arthur S. Levine in a separate suit business.
But the partnership between Tahari and Rosen is far from over. They noted they recently started a line together and they will likely see each other on a daily basis in their offices, which are located on the same floor.
“When I started this company, who ever knew we would have the opportunity to build this into a global brand?” said Rosen. “It’s exciting to put the two companies together as one. I like the idea that it’s now a unified voice around the world.”
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