Velvet, a contemporary casual collection, has received an investment from private equity firm Snow Phipps Group in exchange for a “significant” stake in the company.
Details of the transaction were not disclosed. Velvet’s chief executive officer, Henry Hirschowitz, will remain with the company. Also staying are its designers, Jenny Graham and Toni Spencer.
The collection is sold in high-end doors such as Bergdorf Goodman, Bloomingdale’s, Neiman Marcus and Saks Fifth Avenue. The firm’s Graham and Spencer collection is the priciest of the three, while Velvet has the largest distribution. The company’s Velvetmen men’s wear collection is the smallest of the three lines.
Snow Phipps operating partner Andrew Megibow will join Velvet as non-executive chairman. Megibow was formerly chief operating officer of Ellen Tracy Inc., and is the grandson of Ellen Tracy founder Herb Galen. Under Megibow’s 15-year tenure, Ellen Tracy’s revenues grew to $200 million from $40 million.
Hirschowitz said the timing was right to seek an investor to grow the brand. “There is significant growth opportunity for Velvet in expanding the company into possibly retail and licensing. With the help from Snow Phipps, Velvet is well-positioned with its infrastructure to ride the recovery in the economy.”
In addition to a domestic presence, Velvet is sold internationally in Europe, Canada, Japan, Australia and New Zealand. It currently does not have any retail or licensing operations.
Ian Snow, managing partner at Snow Phipps, said, “This transaction represents our firm’s first foray into the apparel industry despite having spent a number of years searching for an ideal investment candidate.”
According to Megibow, Snow Phipps made the investment because it was impressed with Velvet’s infrastructure, which could “support additional add-ons and brands.” He said Velvet also met the private equity firm’s other criteria for an investment: “Velvet is an authentic brand. It has both creative talent and a strong executive team.”
Frederick Schmitt, managing director of The Sage Group, the investment banking firm that advised Velvet, said the brand, in the market for about 12 years, is currently distributed in specialty boutiques and, through a distribution partner, at high-end stores outside the U.S. “The product has been very successful in its current distribution, and with Andrew [Megibow’s] help, they have the opportunity to take the brand beyond where it is today,” the banker said.
Investment banker William Susman at Susman LLC advised Snow Phipps in conjunction with Financo Inc.
Susman said, “We think the combination of the historic market presence of Velvet with the capital and management resources of Snow Phipps make for a great combination to grow the Velvet brand and build from this platform a thriving apparel franchise.”