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Patience paid off for Samuelsohn.
This story first appeared in the July 19, 2013 issue of WWD. Subscribe Today.
Grano Retail Investments, the parent company of the Montreal-based manufacturer, is expected to reveal Sunday that it has acquired all the tangible assets of the Hickey Freeman brand, including its factory in Rochester, N.Y. Grano has also signed a 40-year license with Authentic Brands Group, which purchased the Hickey Freeman brand as part of its acquisition of HMX Group last year, to produce the brand. Grano was among the parties interested in buying HMX last year, primarily to obtain the Hickey Freeman business.
Terms are not being disclosed. The deal had not yet been finalized by press time, but was expected to be completed before Samuelsohn’s 90th-anniversary party on Sunday night during men’s market week in New York. Senator Chuck Schumer (D, N.Y.) was expected to be in attendance at the party to congratulate Samuelsohn on keeping the Rochester factory open.
RELATED STORY: Samuelsohn Closing In on Acquisition >>
In an interview with WWD on Thursday, Stephen Granovsky, head of Grano Retail Investments, the investment and advisory company that purchased Samuelsohn in 2010, said, “They knew we were one of the bidders, so they called us when Doug [Williams] considered selling the assets, and we jumped at the opportunity.”
The Hickey license had been held by Doug Williams, former chief executive officer of HMX, who formed a new business, W Diamond Group Corp., to manage that brand and the others previously owned by HMX. When Authentic Brands bought HMX, W Diamond had a license to operate Hickey Freeman, Hart Schaffner Marx, Bobby Jones, Christopher Blue, Exclusively Misook and Jag Jeans and paid royalties to Authentic Brands.
Upon completion of this deal, Williams will be left with Hart Schaffner Marx and Exclusively Misook. Western Glove Works acquired Simply Blue, marketers of the Jag Jeans and Christopher Blue denim brands, from W Diamond this spring, and Waitt Co., an Omaha-based firm, acquired all of the operating assets of the Bobby Jones golfwear business in May.
“The restructuring of HMX is now complete,” said James “Jamie” Salter, chairman and ceo of Authentic Brands. “Doug’s company will be debt-free by the end of the year and poised for growth.”
Salter said W Diamond owned the factory in addition to holding the license for Hickey and decided to sell the factory to Samuelsohn. “By selling the factory, the license went with it,” he said. “We would never let the license get split apart from the factory.”
Salter said that is “a great deal for us. We have a partner that is extremely well capitalized and can implement our growth strategy to double the Hickey business over the next three years.”
Granovsky said one of the primary reasons he wanted to buy Hickey was for its factory. Samuelsohn, which produces private-label suits for Paul Stuart and Harry Rosen and sells its own Samuelsohn-label goods to about 200 upscale department and specialty stores in the U.S. and Canada, operates a factory in Montreal. The workers at that facility and the Rochester plant are covered by the same union, Workers United.
“We have great plans for that factory,” Granovsky said. “We’re expecting to expand production, grow jobs and add volume.”
Granovsky said he believes that despite the troubles of its former owners over the past four to five years, the Hickey Freeman brand “remains very valuable. It still commands great prices, and there’s a real awareness of the name in the market.”
He said the plan is to grow the Hickey Freeman brand “as much as 50 percent” over the next three to four years. “We will have doubled the Samuelsohn volume within four years, and we think we can utilize the same disciplines to run that business as we did to grow Samuelsohn.”
He said that while he is not expecting to use the same template to turn around the Hickey business, there are similarities. “At Samuelsohn, we took a very traditional brand and changed its fits, fashion, trims, marketing and brand image and turned it on its head.”
He declined to say whether the Hickey label was profitable, but said, “We only buy businesses where we can make a lot of money. We’re not in the charity business. Hickey should be a very profitable business with the right overhead and discipline.”
By combining Hickey and Samuelsohn, volume should be in the $100 million range, he said.
Arnold Brant Silverstone, president of Samuelsohn and head of its design and marketing, will be the chief designer for Hickey Freeman. Hickey is currently designed by a team led by Jon Morales. Granovsky said, “We intend to keep the design team intact, and they’ll work closely with Arnie.”
Silverstone said job one will be to improve Hickey’s execution, expand its lifestyle offerings and enhance its in-store visuals.
“There are two specific areas where we’ll be focusing,” Granovsky said. “Under the previous management teams, there were new fits and styling, but the brand was not managed in-store. There are some seeds we can grow, but it’s not always easy to take a good idea and execute it.”
Hickey Freeman suits open at $1,495 while Samuelsohn product averages $1,295. Granovsky believes Hickey can “compete effectively at lower prices” than the label’s primary competitors, Italian labels such as Canali, Zegna and Isaia. While the design team may have been working to update its style, “it still comes across as a traditional brand,” Granovsky said.
Price points are expected to stay the same, but the fabric and quality will be enhanced.
Granovsky said he intends to keep the company’s full-price store on Madison Avenue in New York. “We think there’s real opportunity at retail,” he said. He also intends to retain three outlet stores.
By combining Hickey and Samuelsohn, Granovsky said he is building “the North American luxury men’s wear house.” And he’s open to adding to the stable. “We’d consider another acquisition,” he said. “We’re investors and operators, so we’re cautious about digesting what we’ve acquired, but nobody in North America has consolidated the luxury men’s wear market yet.”