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There are deals still being done after all.
Despite the tight credit markets and fears over a recession, Sean “Diddy” Combs on Tuesday revealed he has acquired the Enyce brand from Liz Claiborne Inc.
While terms of the deal were not disclosed, sources said Combs’ company, Sean John, purchased the flailing urban label for $20 million. The Enyce acquisition also includes all rights and trademarks for the RSRV men’s line, which Claiborne launched in top urban specialty stores in September 2007. The purchase of these brands adds to Combs’ overall portfolio of labels, which includes the Zac Posen brand.
Combs said he plans to aggressively build Enyce, a brand that he has always admired.
“I see this opportunity in a similar way that I do with my music,” Combs said. “I take a song and remix it to make it a hit. We are going to do the same thing with Enyce.”
Combs said he already has a team in place at Sean John hard at work brainstorming new ideas for Enyce. He said that over the next few months, the team will look at new distribution possibilities, innovative ways to market the brand as well as a new design strategy. He said he plans to hold on to the Lady Enyce business and expand it along with the men’s wear.
“I look forward to adding our expertise to an already hot fashion line,” he said. “Our long-term plan is to grow the Enyce brand through innovative marketing, expansion of the men’s wear and boys’ lines, and launching into new licensing categories. The current economic climate may be challenging, but we believe it is also an opportunity, and we are really excited to add Enyce to our lineup.”
Combs said he has been friends with one of Enyce’s founders, Tony Shellman, for years.
“I just spoke to him this morning,” he said on Tuesday. “He is really excited. He said he feels that the brand is now in good hands. Enyce has always been his baby.”
In November 2003, Claiborne purchased Enyce for $114 million from Sport Brands International, marking the apparel giant’s first foray into the urban apparel sector. At the time, Enyce was at the top of its game, on track to bring in about $95 million in wholesale volume that year. Since then the brand has slowed down, along with the entire hip-hop apparel sector. Analysts said earlier this year that the brand was bringing in more than $100 million in wholesale volume, but it had lost some of its street cred under Claiborne’s umbrella. The Enyce product, which was founded in 1996 by Evan Davis, Lando Felix and Shellman, wasn’t selling like it once was and Claiborne dramatically decreased the Lady Enyce junior sportswear assortment last year.
“As we continue to implement our strategy of building powerful brands, we determined that we can’t properly maximize the potential of Enyce,” William McComb, chief executive officer of Claiborne, said. “Enyce is a strong brand with a loyal customer following; however, the unsettled economic environment and our commitment to properly resource and focus on other brands in our portfolio contributed to this decision.”
The decision to sell Enyce comes after McComb said in January that the company would keep it after a lack of adequate offers.
At that time, Claiborne planned to house the urban label under its partnered brands division and further invest in the brand’s advertising and e-commerce. In addition, it intended to adjust to a less baggy fit; reduce suggested retail prices by about 15 to 20 percent; pull back on product for 2008 to match supply with demand, and expand the RSRV line. The brand is still in more than 1,000 doors, although it lost its number-one customer, D.e.m.o., with its more than 150 doors that are closing.
In September 2003, the Sean John business was infused with a $100 million investment from California billionaire Ron Burkle, which Combs said at the time would give his company a boost toward becoming a $1 billion brand. Sources said Combs blew through that cash quickly. But, five years later, he is halfway to $1 billion, with sales driven by women’s and men’s outerwear, which is produced under a licensing agreement with G-III Apparel Group Ltd., and fragrances, which are produced by the Estée Lauder Cos. Inc.
The fragrances in particular have been a hit for Combs and Lauder — Unforgivable for Men, which launched in 2006, does about $150 million globally, Unforgivable for Women brings in about $45 million and the third, I Am King, will launch exclusively at Macy’s in December. Lauder executives predict I Am King will generate about $100 million globally.
On the apparel front, men’s wear hasn’t been too much of a challenge for Sean John. Women’s, on the other hand, has been through a series of hiccups. The holiday 2007 introduction of the Sean John junior line (which was also produced by G-III) was his second official attempt at launching a women’s collection. After poor retail performance, that line was shuttered in January. His contemporary line, Sean by Sean Combs, closed in March 2006 after being offered at retail for less than a year. That collection, produced in-house, raked in $3.5 million in wholesale volume during its first six months on the selling floor. While that isn’t considered bad for a new contemporary designer collection, it isn’t the high volume Combs is used to seeing: At the time, he did $450 million at retail with Sean John men’s, which he claims now generates $525 million in retail volume.