Rick Darling

With the completion of the sale of select North American assets to Differential Brand Group, Global Brands Group Holding Ltd. has made a key executive change.

Rick Darling has been named chief executive officer and executive director of GBG, succeeding Bruce Rockowitz, who has stepped down as ceo but will continue as non-executive vice chairman. Darling will lead the transition.

In June, GBG entered into a sale and purchase agreement with Differential. GBG said Monday it has received a cash amount of about $1.2 billion with the final consideration being subject to certain post-closing adjustments, which are not currently expected to involve a material amount.

“The completion of this transaction enables us to realize value for businesses that we have grown to more mature levels and at the same time focusing on areas that we have significant growth potential with improved operational efficiency and reduced working capital needs. It also gives us the ability to strengthen our balance sheet and to improve value to our shareholders,” said William Fung, chairman of Global Brands Group Holding Ltd., to whom Darling reports, along with the board.

“With this very successful and strategic transaction completed, I have decided it is the right time to step down as chief executive officer of Global Brands Group, but will continue to serve on the main board of Global Brands Group and the boards of CAA-GBG, our joint venture with Creative Artists Agency and Seven Global, our joint venture with David Beckham. I am honored to have served as ceo since our listing in July 2014 and confident that Rick will lead Global Brands into a new and exciting future,” Rockowitz said.

Darling added, “Today represents a new chapter for Global Brands. Coming out of this deal, we now have a very strong balance sheet and robust cash flow. We have emerged a more agile and focused company with great brands in our men’s and women’s apparel and footwear platforms to which we will be adding more brands in the future. Our CAA-GBG Brand Management business in the U.S., Europe and Asia is the largest of its kind in the world.”

Darling was the former president of LF USA, which was the predecessor of GBG and most recently served as executive director, LF Americas, Li & Fung Ltd.’s wholesale and distribution business in the U.S.

Rockowitz cofounded Colby International and was ceo and president from 1986 to 2000. In 2000, Victor Fung and Li & Fung acquired Colby for $2.2 billion. Rockowitz served as ceo of Li & Fung before coming vice chairman and ceo of GBG in May 2014.

In an interview at New York headquarters at the Empire State Building Monday, Darling said the deal with Differential allows GBG “to pay off all the debt of the company and literally clean up the balance sheet of the company and refresh the entire strategy going forward, in terms of how we view the business.” He said the remaining business at GBG would be GBG North America, the men’s and women’s apparel divisions and footwear divisions; GBG Europe; GBG Asia; GBG Korea, and Brand Management business, which is the joint venture between CAA and GBG.

“The company has built up quite a bit of debt — $1.2 billion over the last few years — and the transaction allows us to pay off all debt, strengthen our balance sheet because of that, narrow our focus into the core businesses we felt were important going forward, and put us in a position to go on a growth projectory,” Darling said.

Among the women’s apparel businesses are Jones Apparel, Ellen Tracy and Tahari and on the men’s side, Kenneth Cole, Sean John and Elliott Walker. In the footwear categories are the Calvin Klein-licensed footwear business, Frye, Aquatalia, Taryn Rose, Katy Perry and private label footwear.

The sale includes about $2.2 billion of its $4 billion in its 2018 revenues.

The businesses that were sold to Differential are kids, accessories, and the West Coast businesses such as BCBG, Bebe, Joe’s Jeans and Buffalo.

Ron Ventricelli will remain chief financial officer of GBG.

As ceo, Darling will be based in New York. The company works closely with its sister company, Li & Fung, which will continue to provide its sourcing platform. Rob Sinclair, a senior person from Li & Fung, has joined GBG as president of supply chain, based in Asia, with the intent of moving many of the sourcing and production processes closer to the needlepoint.

“As we go down the path of repositioning the new GBG, one of the major things we’re going to be doing is looking at the supply chain side, which includes everything from sourcing and production through technical design and product development, moving many of those functions closer to the needlepoint to shorten lead times and make the decision-making closer to where the production is actually taking place,” Darling said. GBG will also be implementing 3-D and virtual design capabilities to be able to speed up the front end of the supply chain. “This really gives us an ability to reimagine the company,” Darling said. “My intent is to be able to really reinvent the wholesale model we’ve been dealing with to make it much more nimbler and much more efficient, and closer to the consumer and then to add other brands and other businesses to support our customer base,” he said.

GBG continues to have relationships with Authentic Brands Group, Bluestar and Marquee Brands, the intellectual property brand owners as well as companies as PVH Corp. and Disney, Darling said.

About half of GBG’s volume was involved in the sale, he noted.

Going forward, Darling said he’s looking for emerging brands, as well as established ones. “Our vision is the brands will have strong consumer connection,” he said. GBG owns some of its brands, and licenses others. “Many of the brands we look at have global capabilities,” he said. Another pillar of growth is Brand Management, which has Jennifer Lopez, Playboy, Jeep and a group of character licenses. “Its business is to license and sub-license brands for brand owners,” he said. The business is based in London, New York and Shanghai, and GBG is looking  to expand that. “We actually believe that will become a real growth vehicle for us in China where Western brands are now picking up traction at the consumer level,” Darling said.

Asked if the company had become too unwieldy, Darling said, “Not unwieldy. I think businesses grow to a certain point and take on a certain amount of debt and you have to sit back and reflect on what you have and what you’d like to have. In our case, we took a pretty clear view of the businesses we wanted to be able to support and we wanted to clean up our balance sheet so we could use our resources to go to those business.”

In May, GBG had warned that $100 million in noncash charges as well as the loss the Coach footwear business would push it into the red for the year. Now that’s not happening, he said. “We will continue to evaluate the portfolio, but we will be in the business of adding brands and adding resources to those brands at the closing,” he said.

GBG and Differential will both be staying at 350 Fifth Avenue on the same group of floors.

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