VF predicts the vertically integrated firm, which it bought last week for $110 million, can grow to at least a $350 million business from its current $57 million in annual sales, driven by opening at least 20 stores a year for the next 10 years.
Combined with its existing 50 units, that would bring Lucy's door count to at least 250 in a decade. Key areas for growth include the corridor between Boston and Washington, as well as clusters in the Midwest built out from Chicago.
"It could go faster than that, sure, but we need to prove out the model," said Eric Wiseman, VF's president and chief operating officer. "They started on the West Coast and as they've moved East, they haven't seen any stop signs. They've just seen 'go.'"
There are also e-commerce growth opportunities for the company, which was started as lucy.com in 1999 by Nike alum Sue Levin. The Portland, Ore.-based firm thrived during the Internet boom, but in 2001 shut its Web site and shed the majority of its 100 employees. The privately held company hired Mike Edwards as chief executive officer in 2004 and has been growing as a retailer ever since. Today, Lucy takes in 5 percent of its sales from its Web site.
VF, based in Greensboro, N.C., inked the deal to buy Lucy the same day it acquired Seven For All Mankind for an estimated $775 million. The two acquisitions form the foundation of the new VF Contemporary Brands division. While Lucy has the lower profile and is the far smaller of the two acquisitions, it still will get the full treatment for which the $6.21 billion apparel giant has become known.
Lucy's management team is expected to stay in place. Edwards will continue to run the business and will report to Mike Egeck, ceo of Seven For All Mankind and a former VF executive who will be named president of VF Contemporary Brands when the deals close, likely at the end of August.
"I really like the fact they allow their brands to be independent and be very innovative around their customers," Edwards said. "They've made it perfectly clear they want to retain this management team 100 percent and at the same time, they bring a host of resources and infrastructure to our company that it would have taken me years to create. So long-term we can focus on product."Edwards told WWD in May that he was open to pursuing an initial public offering or being acquired, particularly "by a strategic player with infrastructure already built." He contacted VF earlier this year and, according to Wiseman, Lucy's direct-to-consumer platform and status as a growing women's lifestyle brand appealed to the apparel conglomerate, which counts brands such as Wrangler and The North Face among its portfolio.
"We are a perfect fit for the VF portfolio," Edwards said. "We bring a certain expertise in managing better women's lifestyle brands that should help some of their other brands as well."
While the VF brand Reef appeals to the surfer, its Vans to the skateboarder and North Face to the outdoors aficionado, Lucy targets the wellness-oriented female, Wiseman explained. "Synergies with other brands was not a driver of the acquisition at all," Wiseman said. "Our focus will be building the Lucy brand through the Lucy stores, but if Mike and his team want some of our other brands for the stores, we are open to working with them."
Lucy stores already carry Reef, which saw business with the company soar more than 70 percent this year over last, according to Edwards, who added he "sees great synergy with North Face as well." More than 80 percent of Lucy's sales come from its own label, and the rest comes from Reef, Nike accessories, Splendid and Prana, which has led some analysts to speculate the Liz Claiborne-owned Prana could be another possible acquisition target for VF.
But Wiseman said VF has not discussed buying Prana, which Claiborne recently put on the selling block, nor did it look at Lululemon, which had an IPO last week. Women's brands, and specifically contemporary labels, will likely take precedence over activewear as a sector where VF is trying to expand. As always, Wiseman said, VF is open to acquiring "when the right company becomes available."
My character, Dinah Madani, is just the coolest, [most] badass woman imaginable," says @amberroserevah. The actress stars in @marvel's newest series on @netflix, @thepunisher. To prepare for her role, Revah sat down with Homeland agents to get a real sense of with Dinah's day-to-day life is really like. Read our full interview on WWD.com. #wwdeye (📷: @jilliansollazzo)
A scene from the 91st annual @macys Thanksgiving Day Parade. The parade, which boasts 50 million TV viewers and 3.5 million on-site spectators, is considered one of the largest and most watched parades in the world. (📷: Jason Szenes/EPA-REX)
The circus came to @bloomingdales 59th Street on Tuesday night and lit up Lexington Avenue with acrobatic dancers, death-defying knife throwing, sword swallowing and aerial acts with no net. The 45 minutes of theatrics built up to unveiling the holiday windows depicting @swarovski crystal-encrusted circus pieces and scenes from “The Greatest Showman” – songs from the soundtrack included. See the rest of the photos on WWD.com #wwdfashion (📷: Joshua Scott)
The psychedelic fashion that pervaded the ’60s is back with an exhibit at the @museumofcityny. “Mode New York: Fashion Takes a Trip” chronicles the changing styles from 1960 through 1973 and features designers such as @ysl, @oscardelarenta and more. The exhibition, which is on display through April 1, is organized into four periods: First Lady Fasion, Youthquake, New Bohemia and New Nonchalance. Pictured here is model Pat Bardonella during the Garvey Day Parade in 1968. (📷: @kwamebphoto) #wwdeye #wwdfashion
“People should be a lot more honest in expressing both the dark and light of themselves. We need to give each other the space to do that because it’s the only way we can grow and evolve,” says @noelwells of her new film “Mr. Roosevelt,” which is largely based on her own struggles. Unexpectedly leaving @nbcsnl in 2014 after just one season, Wells felt set back in her self-esteem and career trajectory. She quickly refocused her energy to more personal projects, which led to the completion of “Mr. Roosevelt.” Read the rest of WWD’s interview with the “Master of None” actress on WWD.com #wwdeye (📷: @jilliansollazzo)
@barbrastreisand is giving fans a chance to see her perform up close in a new concert series, which makes its debut on @Netflix today. From behind-the-scenes takes to her concert performance in Miami last December, the two-hour streaming special captures Streisand in her element. Pictured here is the singer/actress photographed for WWD in 1963. (📷: Palmieri Tony) #wwdeye #wwdarchive
@chanel and @pharrell dropped what’s being dubbed as the world’s most exclusive sneakers yesterday. The Adidas Originals NMD Hu, which Williams designed in collaboration with Chanel and @adidasoriginals, has a waiting list of over 120K people who pre-registered online at chanelatcolette.fr –– and only 500 pairs are on sale. The singer predicted the resale value of the shoes could reach $40K. Read the full interview on WWD.com. Link in bio. #wwdfashion (📷: Dominique Maître)
@imanshumpert is diving deeper into his creative endeavors and relaunching his clothing line, Post 90s, and is helping to raise money for the hurricane victims in St. Maarten with a jersey he’s designed with his brother. The Cleveland Cavaliers player talked to WWD about kneeling during the national anthem, working with fashion brands and how he wants to be more than an @nba player. Read the interview on WWD.com #wwdfashion (📷: George Chinese)