Now that Joe’s and Hudson Clothing will have new owners, what’s next for the brands?

Joe Dahan, the creative director at Joe’s Jeans Inc., will join Sequential Brands Group as creative director of the Joe’s brand. Sequential is slated to acquire the intellectual property assets of the brand for $67 million. In a related transaction, Global Brands Group, which will handle the sourcing and production of the product for Joe’s, is acquiring certain operational assets connected to Joe’s for $13 million. The new partnership with Sequential will give GBG a new vertical for its business in the denim space. The aggregate value of the deal is $80 million. The transaction is slated to close before Sept. 30.

Dahan said one of the problems he had with growing Joe’s is the lack of an international presence. “We needed a partner who could propel the brand to the next level. The only way to do that is to partner with someone with an international presence. Global Brands Group can do plug-and-play internationally,” he said.

Dahan gets to stay in Los Angeles and focus on the design direction for the brand. He said the added benefit is that the partnership between Sequential and GBG allows him to tap into GBG’s resource. “I will be able to maintain the DNA of the brand, while having the availability of GBG’s sourcing,” Dahan said.

That benefit, he said, will allow him to expand Joe’s to other categories such as outerwear and sweaters, both in terms of the depth of the line extensions and the quality of the product for both men and women.

Although some say denim has been a less popular fashion option in the last few years, Dahan — and a host of others, including retailers and other brands — said that’s changing. While the torn, destroyed look has likely had its day, and colored jeans are probably already on the way out, the newer options rely more on traditionally colored blue denim rinses, he said. New for fall is the interest in silhouettes, such as cropped denim and the flared leg. “The straight, low-rise boyfriend look is what everyone is now testing,” Dahan said, noting that he’s also testing a new black denim fabrication that “doesn’t take the heat because it reflects sunlight.”

Dahan also said the acquisition of Hudson Clothing was what hurt the company and led to its financial challenges.

According to Dahan, “Even after we acquired Hudson, we treated the two brands as separate companies. We weren’t even in the same office and we didn’t get involved in the Hudson business.

“We didn’t move Hudson’s production. They kept producing in L.A. and the costs [impacted] our EBITDA. We didn’t meet the bank covenant because of that.”

In contrast, Dahan said the Joe’s business fared “OK” during the economic downturn, explaining that while business slipped, it essentially just “flattened out.”

Hudson, which was sold in 2013 by Fireman Capital Partners, will be owned by a new entity called Differential Brands Group. Differential is the new name of the merger between Hudson with RG Parent LLC, the parent company of the Robert Graham brand. Tengram Capital Parners, the controlling owner of Robert Graham, is also an investor in Sequential. In connection with the merger, William Sweedler, Tengram’s cofounder and managing partner, will become chairman of Differential.

The merger, which still requires approval of Joe’s shareholder, should be completed in the fourth quarter. Approval would also result in a one for thirty reverse stock split. In connection with the transaction, Tengram will invest $50 million to recapitalize the business. Differential will also keep the Joe’s Jeans listing and trading on Nasdaq, although it wasn’t immediately clear what the stock symbol would be.

While Michael Buckley, the current chief executive officer of Robert Graham, will become the ceo of Differential, it wasn’t clear what Peter Kim’s role will be, if any, with Hudson. Kim founded Hudson, and he and Fireman are shareholders in Joe’s Jeans.

The formation of Differential creates a “premium branded consumer platform” focused on owning brands through a global, omnichannel strategy. That strategy can include wholesale accounts at the department and specialty store levels, direct-to-consumer retail stores, e-commerce and licensing.

The expectation is that Differential will be eyeing acquisition opportunities so it can add more brands to the new platform.

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