Tory Burch is bringing some momentum into 2022.
As the designer prepared for her fall runway show late Monday — where, according to the review by WWD executive editor Booth Moore, the brand “lit up the night” with “a thumping celebration of sensual eveningwear and quirky, individual pieces” — sources started buzzing again about the underlying business.
In a retail landscape remade by the pandemic, the brand has been able to capitalize on the changes and connect with consumers, logging a strong year under Pierre-Yves Roussel, who became chief executive officer in 2019.
It’s an in-the-family affair, since Roussel, a former LVMH Moët Hennessy Louis Vuitton executive, is married to the designer.
But the broader Tory Burch family, as in shareholders, has also benefited from the brand’s recent success and the company is said to have paid a dividend late last year. At least some investors saw the payout as bigger than expected while others described it as a more modest gesture to shareholders.
Take that as one more sign that there’s life in fashion still, particularly for higher-end brands like Tory Burch that might have been born in an earlier age of fashion but have found their pandemic footing and are preparing for big things ahead.
The company rarely weighs in publicly on its finances and could not be reached for comment Tuesday.
Tory Burch has a history of attracting investors and inspiring them to stick around for an unusually long time by fashion’s big money standards.
In 2018, the company bought out a minority stake held by Tresalia, the Mexico City-based investor led by María Asunción Aramburuzabala that invested in the business in 2009.
That transaction effectively boosted the ownership stakes held by the designer as well as General Atlantic and BDT, the company’s major shareholders. (General Atlantic and BDT invested in the business in 2012 when the designer’s ex-husband, Chris Burch, cashed out most of his stake.)
Although nothing is imminent, sources said discussions about what comes next for the company are starting.
That is a conversation that could ultimately see the company bring in some new backers or potentially open the door to other options, including an IPO — although that is a step executive chairman and chief creative officer Tory Burch has long resisted. The IPO market has also cooled some since last year when a rush of next-gen fashion players took advantage of a booming Wall Street and took their companies public.
Regardless, it seems the company has some time to move forward thoughtfully — as the designer is known to do.
Although the Tory Burch brand is privately held, it has had a number of investors that have moved in and out. Its valuation has been said to grow from $1 billion when Tresalia bought in 13 years ago, to $2.25 billion when BDT and General Atlantic joined, to $3.5 billion in a series of 2015 stock swaps.
What the value is today depends on the market, which will take into account the company’s financial performance and its prospects.
Some details on the inner workings of the brand’s finances have come to light over the past year, however.
Last March, Moody’s Investors Service started rating the company, assigning it a corporate family credit rating of “Ba3” when the firm was setting up a $200 million senior secured first lien revolver due in 2026 and a $600 million senior secured first lien term loan due 2028. The company planned to use the term loan to “refinance existing debt, repurchase a minority equity stake and pay for fees and expenses,” Moody’s said.
At the time, Moody’s said the brand’s revenues were roughly inline with its luxury peers, falling 15 percent in 2020 in the midst of the pandemic to about $1.2 billion.
In a credit update last month, the debt watchdog said Tory Burch had a “strong operating performance” during the first three quarters of 2021 due to “its recognized brand, global presence and diversified sales channels with a well-developed digital business, balanced store footprint and controlled wholesale distribution.”
But the brand is also competing in a luxury landscape of giants, from LVMH and Gucci-parent Kering to multibrand companies like Capri Holdings, which owns Versace, Michael Kors and Jimmy Choo.
Moody’s noted the company’s credit profile “is constrained by Tory Burch’s relatively small scale and high fashion risk as a single-brand company in the highly competitive accessories, footwear and apparel category. The company also has a limited history at this scale, and although it has invested in building talent, the brand is tied to its founder, creating material key woman risk. While significant investments have been made in infrastructure over the past several years, in Moody’s view further focus on omnichannel and global capabilities is needed to support the company’s growth.”
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