LONDON — Warburg Pincus has agreed to take a majority stake in Reiss, the British fashion label.
Financial terms of the deal were not disclosed, but the private-equity firm has valued Reiss at 230 million pounds, or $327 million at current exchange.
The new ownership will allow Reiss to expand further into the U.K. and overseas, with a focus on North America, Asia and Australia, the company said.
Founded in 1971 by David Reiss, the international fashion brand is a favorite of the Duchess of Cambridge and operates more than 160 stores in 15 countries with a well-developed e-commerce presence. In the year ending Jan. 31, the company generated sales of 146 million pounds, or $208 million at current exchange, and earnings before interest, tax, depreciation and amortization of 24.4 million pounds, or $34.7 million.
The investment from Warburg Pincus will enable Reiss to expand further in the U.K. and internationally, especially in North America, Asia and Australia, building on Reiss’ existing businesses in those countries and leveraging Warburg Pincus’ expertise in working with growth companies around the world.
David Reiss will retain a significant stake in the company and remain as chairman and chief executive officer.
“I’m delighted to be working with Warburg Pincus as we take Reiss to the next stage of its development,” Reiss said. “We have built a great business providing our customers with timeless luxury at affordable prices and I’m confident that working together we’ll be able to build Reiss into a truly global fashion brand.
Paul Best, managing director at Warburg Pincus, said, “As long-term growth investors, we look forward to partnering with David and his team and supporting the global expansion of Reiss. The business has built an enviable position in its core U.K. market, with a broad and loyal customer base, and we believe there is a significant opportunity to build on that success and accelerate development internationally.
“We think the business, led by its highly entrepreneurial founder, David Reiss, caters to the relatively underserved work wear, formal wear and occasion wear end of the market with high quality, well-designed classic and contemporary clothing that’s less prone to fashion risk,” Best said. “The overall market for affordable luxury clothing and accessories remains in strong growth [mode] as consumers globally seek high quality products at accessible price points.”
Reiss has made inroads in the U.S. in terms of brand recognition, in spite of the fact that it hasn’t launched any real marketing efforts, Best said.
“We’ll be working with management over the coming months around the growth plans for the U.S. market and where we see a big opportunity,” he said. “Warburg Pincus is an engaged and active investor and we look forward to providing [Reiss] with strategic input and access to our wider resources.”
Reiss entered the U.S. market in 2004 with a store in New York’s SoHo. While the retailer opened shops-in-shop in about 10 Bloomingdale’s locations, Reiss hasn’t scratched the potential of the U.S. market in terms of freestanding stores. The company operates three units in Manhattan — on West Broadway, Columbus Avenue and Bleecker Street; a unit on North Robertson and Beverly Boulevard in Los Angeles, and a store in Boston on Newbury Street. There are opportunities to expand to San Francisco and Santa Monica, and elsewhere in Miami since Reiss is only sold at Bloomingdale’s at the Aventura Mall.
Morgan Stanley was the financial adviser to Reiss Holdings, while Squire Patton Boggs acted as legal adviser. Finance was Warburg Pincus’ financial adviser with Freshfields Bruckhaus Deringer LLP as legal adviser.