Halston is reconnecting with itself.
Xcel Brands Inc. — which bought the H by Halston and H Halston trademarks in 2014 and built them into QVC and department store businesses — has now acquired the Halston and Halston Heritage trademarks with plans to expand the higher-end side of the business online and, perhaps, through stores.
Market sources estimated that Xcel will ultimately pay between $9 million and $15 million for Halston and Halston Heritage. That comes on top of the $27.7 million in cash, stock and warrants Xcel paid for the lower-priced brands just over four years ago. Together the two transactions mark an exit for Hilco Consumer Capital, which bought the brand for $25 million in 2007.
“It makes sense now for us to consolidate all the labels under one ownership, have one point of view in terms of what the product is, what the DNA is, of course staying to what Roy [Halston Frowick] created,” Robert D’Loren, Xcel’s chairman and chief executive officer, told WWD.
“The old setup was everything in premium was done by Halston Heritage,” he said. “They couldn’t come down [in price]. And we had everything in the better zone and we could never go up. Heritage worked in their silo and we worked in our silo and I don’t think it was the best approach.”
D’Loren said he was “happy now to have it all under one roof with creative direction coming from one senior creative director.” That chief creative office will be Marie Mazelis, who has been overseeing Halston.
Xcel inked a licensing deal with Groupe JS International to produce and distribute Halston sportswear as well as dresses for Halston Heritage.
Halston Heritage brings an important e-commerce presence to Xcel.
D’Loren said the H Halston department store line was set up as a fast-fashion play, but that the back-end technology and consumer data savvy couldn’t overcome consumer habits.
“It is not easy to implement a fully vertical, fast-fashion strategy in a department store,” the ceo said. “The customer doesn’t know to go to a department store every week for something new. For us to really reap the benefits of this [infrastructure], we need to be direct-to-consumer. That means e-commerce and our own stores. Buying Halston Heritage gives us that e-commerce platform.” (Halston Heritage is also currently sold at retailers such as Neiman Marcus, Saks Fifth Avenue and Bloomingdale’s).
The ceo said rents are becoming more attractive, making stores easier to set up.
The Halston transaction might also signal that the slow designer deal market — and the generally acquisitive D’Loren — are ramping up.
“We’ve just been patient,” he said. “These are difficult times at best. Change that is happening [in the industry] caused me to pause and really think about the setup for the change.”
Now that Xcel is better positioned, he said, “I would say we will be a little more aggressive in the market.”
That is, if the price divide can be overcome.
“All entrepreneurs think their companies are worth 10 times more than they really are, that’s usually the rub,” he said.
Investment banker Gilbert Harrison, who is chairman of the Harrison Group and has been working with Xcel, said that while Halston’s appeal remains, some older names will have trouble connecting with new consumers.
“What’s the DNA the brand has, and will the next generation understand the brand at all?” said Harrison.
That’s the question many brands are trying to answer — from New York Fashion Week to Instagram and beyond.