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Tory Burch has found a new partner.
After a yearlong search for additional financing, the designer has sold a minority stake in her more than $200 million firm to Tresalia Capital, a Mexico City-based family-owned and -operated investment company known for investing in Mexican projects from young entrepreneurs.
Tory Burch executives declined to divulge the final price and the percentage stake they sold to Tresalia, but industry sources estimate it at between 20 and 25 percent.
Burch and her ex-husband, Christopher Burch, who cofounded Tory Burch five years ago, still jointly own the majority stake in the firm, which now operates 18 freestanding stores and wholesales apparel and accessories to 450 high-end department and specialty stores worldwide. Christopher Burch is still actively involved in the company, but declined comment Thursday.
With the ongoing recession, increasing credit crunch and overall declining retail sales, the Burch deal comes at a time when few acquisitions or other investments are being made in the fashion world. In the past year, only a handful of key brands have inked deals — Jones Apparel Group Inc. acquired a 50 percent stake in Rachel Roy, VF Corp. acquired the Splendid and Ella Moss brands and Iconix Brand Group Inc. purchased Ed Hardy.
Tresalia is run by María Asunción Aramburuzabala, who is president and chief executive officer. According to Tory Burch, her company is Tresalia’s first investment in the apparel industry. Tresalia has invested in several Mexican companies in industries such as telecommunications, real estate, technology, media, education and health, as well as the management of private and venture capital funds and the creation of new companies. Aramburuzabala, who could not be reached for comment, is also a vice chairman at Grupo Modelo, a family-founded Mexican brewery.
“I love that they are a family-owned business and a private company. I felt an instant connection with them when we met, and this is a process we started about a year ago. I’m so thrilled to have closed the deal with the right partner,” said Tory Burch.
Burch said with a new investor, she now has the infrastructure to grow on a global scale, particularly in South America, where sales have been promising in many of the brand’s wholesale accounts.
“The team at Tresalia Capital has the same entrepreneurial values that our brand was built on,” she said. “They have a great understanding of the vision we have for Tory Burch and the future of our company. I look forward to working with them as we continue to expand and diversify our brand on a global scale.”
Burch said she particularly likes that Tresalia’s owners are big believers in philanthropy, and that they’ve encouraged Burch to continue her charitable work.
Last year, she established The Tory Burch Foundation, which provides economic opportunity to women and their families in the U.S. The Foundation’s first partner, ACCION USA, provides loans and financial services to small businesses.
WWD reported in July 2008 that Burch was on the hunt for an investor. At the time, Burch said she was looking to sell a 30 percent stake for about $300 million, based on a self-valuation between $935 million and $1 billion for the whole company. However, sources said with such a steep asking price, the field of candidates had been narrowed down to two main bidders, TSG Consumer Partners and Bear Stearns Merchant Bank. Calling the asking price too high, particularly given the current lending environment, sources estimated the stake’s price would come in closer to $250 million. Neither firm ended up investing in the brand.
Originally launched as a retailer, Tory Burch plans to add six more stores in the U.S. to her current 18 units before the end of the year. In addition, the company will open its first freestanding store in Japan in the Ginza section of Tokyo by yearend.
Burch also plans to build on the wholesale portion of the business. In March, the designer signed two long-term Asian distribution deals — the first with Look Inc. in Japan and the second with Samsung Cheil Industries Inc. in South Korea. The deals marked the first time the Tory Burch brand was sold in those countries. According to Tory Burch president Brigitte Kleine, the goal is to eventually run businesses of equal size in the U.S., Asia and Europe. The fall Tory Burch collections will be sold in Japan in Isetan, Hankyu Umeda in Osaka and in Takashimaya Nagoya, and the goal is to open six freestanding stores and 24 department store locations throughout Japan within the next few years.
Last year, the company opened a showroom in Milan. For fall, the brand will be sold in about 371 doors throughout Europe.
Currently, Tory Burch sells in major department and specialty stores worldwide including Bloomingdale’s, Saks Fifth Avenue, Bergdorf Goodman, Selfridges and Harvey Nichols. Products wholesale from $119 to $166 for clothing and from $95 to $272 for accessories. Half the business comes from accessories, which includes handbags, shoes and jewelry. With the exception of eyewear, which is licensed to Luxottica Group SpA and will launch in November, and footwear, which is produced under a production partnership with Vince Camuto, all products are designed and produced in-house.
Although Burch’s vibrant printed tunics and “luxury at a price” clothing were what launched her company in 2004, it was her popular line of Reva ballerina flats, which showcased her now-famous “double T” logo, that catapulted her success. Last year, she beat out Marc Jacobs and Michael Kors at the Council of Fashion Designers of America awards, winning the Accessories Designer of the Year. In 2005, and after just one year in business, she won a Rising Star Award for best new retail concept from Fashion Group International.