Alexander Wang is on the hunt to fund the next stage of the evolution of his business.
Financial sources said the designer is working with merchant bank The Raine Group, which is running a “limited process” intended to raise funds to open more stores and bolster Wang’s direct-to-consumer business.
The brand is said to be courting private equity investors and strategic players. One source said Wang is looking to raise $30 million. Another stressed that it appeared to be a process to raise money and not to sell the company, which is said to have sales of about $100 million before licensing revenues.
“He is looking to raise some money and bring in a partner that can help him realize the potential for his business,” said one source. “A lot of this business is wholesale and I think he feels there’s a big retail play.”
Related Galleries
Representatives for Wang and Raine did not respond to WWD requests for comment on Friday.
Building out the direct-to-consumer portion of the business would help untether the designer from wholesale distribution, which has become more troublesome for brands as department stores struggle with traffic and try to reinvent themselves.
On its web site, the company lists 154 points of purchase, including flagships in New York, London, Seoul, Tokyo and Beijing and distribution through Saks Fifth Avenue, Barneys New York, Bloomingdale’s, Neiman Marcus, Harvey Nichols and more.
The brand’s offering is relatively fleshed out with women’s and men’s apparel as well as shoes and bags, although sources said there is room for the brand to strengthen those offerings.
Wang has played the field before and talked to private equity firms about an investment, but a connection was never made and some suggested that the company didn’t have the right management in place to sync up with a professional investor.
That seems to have changed.
Lisa Gersh was named Wang’s chief executive officer last year, having previously been ceo of Martha Stewart Living Omnimedia as well as Gwyneth Paltrow’s Goop.
Gersh is familiar with running businesses where the founder is on the scene and involved and is said to have helped build up the team at Wang, making it more investor-friendly.
Wang, like many designers, finds himself caught between two worlds. The brand was established before Instagram took over the fashion imagination and was helped along by key department stores. But it is now trying to switch to new distribution and keep up with consumers’ attitudes toward the way they shop.
Wang is in many ways well-positioned to make such a change.
While he built one of the last brands fueled by the downtown cool crowd, he has retained his mystique into the digital age, drawing hordes to out-of-the-way parties and counting 4.3 million Instagram followers.
Wang, who has collaborated with Adidas and helped pioneer June as a stop on the fashion show calendar, was also early in mixing streetwear and high fashion. While the brand has not fully tapped that potential, the success of Supreme and Virgil Abloh’s turn at Louis Vuitton show the potency of the combination.
But he comes looking for funds just as many other designers of his generation face pressure, key strategic decisions and corporate changes. Christopher Kane is in the process of trying to buy back control of his brand from Kering, Opening Ceremony is exploring its options and Proenza Schouler is rumored to have quietly tested the market to gauge potential interest.
Many investors remain wary of fashion in general with so little visibility into just what the future of selling apparel looks like and how one can do it profitably.
The smart money in recent years has been in beauty, where margins are higher, where social media more clearly drives sales and where there’s a group of large strategic players looking to snap up the next new thing.
However, the sky-high prices in beauty — brow brand Anastasia Beverly Hills scored a reported $3 billion valuation from TPG last month — has some investors looking again at fashion and wondering if it’s time to give it another shot.
That might make this the perfect time for Wang to see if it’s time to get the investment party started.
