Oxford Industries has added another happy brand to its portfolio.
The California-based brand was founded in 1987 and has created a niche in bohemian-inspired apparel for women. It has $202 million in revenue with gross margin of 70 percent and an operating income margin of 17 percent and is expected to be accretive to Oxford’s earnings in fiscal 2022.
Tom Chubb, chairman and chief executive officer of Oxford, said that he had met the brand’s founder Eli Levite about eight years ago and they started talking about an acquisition. “We liked him a lot but we concluded at the time that we weren’t the right buyer.”
Levite, who had named the brand after a Bob Marley song of the same name, instead took on an investment from Endeavour Capital in 2015 and brought Rob Trauber on board as CEO to chart an aggressive growth strategy that would take the company from a family-run operation to a large-scale enterprise.
Chubb said he stayed in touch with Trauber, who had worked for Juicy Couture, Cole Haan and Coach, and the discussions started up again around three years ago to bring Johnny Was into the Oxford fold.
“We were in serious discussions and headed to a transaction when the pandemic came along,” Chubb said. “So we put things on hold by mutual agreement but picked up again this spring.”
Chubb said Trauber will continue to serve as CEO of Johnny Was after the deal is finalized. “We’re very excited to be partnering with him on this great addition to Oxford and the next phase of Johnny Was,” he said.
“Since 1987 Johnny Was has been inspired by a free-spirited signature aesthetic that embraces a quintessential California lifestyle,” Chubb added. “With its beautifully crafted clothing and one-of-a-kind accessories, Johnny Was continues to transcend fashion trends. Rob Trauber and the team at Johnny Was have done a spectacular job of leveraging its brand point of view and exceptional, differentiated product to build Johnny Was into a powerful, omnichannel brand with an incredibly loyal customer following. The addition of the Johnny Was brand to the Oxford portfolio further balances our business across fashion points of view, price points, seasons and geographies.”
He touted the company’s direct-to-consumer presence, which includes 61 stores and an e-commerce site as well as its strong wholesale division as among the strengths of the brand. The company has more than 220,000 unique direct-to-consumer customers and the average order size is $290. Its customer is aged 45 and older with a median income of $150,000 to $200,000.
Chubb said the stores “do very well,” and after a tough year during the height of the pandemic, “came back nicely in 2021 and are having a great year this year.” They are located in 24 states, in both large and small markets, and average 1,600 square feet in size. They produce $700 in sales per square foot and are profitable in under two years.
He said that while e-commerce is “such an important part” of the business today, Oxford remains a fan of brick-and-mortar. “They’re not mutually exclusive, they work together,” he said. If they’re the right stores, they can be “very profitable on a stand-alone basis and can help bring a customer into the brand. We slowed down during the pandemic, but we’re actively adding stores for all our divisions again.”
Even so, he stressed that while it may no longer drive the business, Oxford still respects the wholesale avenue. “We still think multibrand retailers are very important and is what the consumer wants sometimes. They give an array of choice, and we still want to play in that world.”
For Johnny Was, retail customers such as Neiman Marcus, Saks Fifth Avenue, Bloomingdale’s, Dillard’s and more than 1,000 specialty stores remain “an important part of the business.”
Going forward, Chubb said the plan for Johnny Was is to increase brand awareness and gain market share within the $11 billion affordable luxury market; attract more customers by adding physical stores, investing in digital and looking into international opportunities, and increase annual spend levels by continued category expansion.
Rob Trauber, CEO of Johnny Was, added, “We are delighted to be joining the Oxford portfolio of amazing lifestyle brands. With its proven track record of partnering with brand management and investing in their businesses to help them reach their full potential, we believe that Oxford is the perfect home for the next phase of Johnny Was growth. I am incredibly grateful to the dedicated team of people at Johnny Was for helping the brand get to this point and look forward to our continued success together as we work with Oxford going forward. I would also like to express my appreciation to the founders of Johnny Was and to Endeavour Capital for their stewardship over the last seven years.”
Chubb said the deal with be financed primarily through cash on hand, with the remaining $100 million covered by borrowings on Oxford’s revolving credit facility. The expectation is to pay off the debt within the first year of ownership.
Oxford was founded in 1942 and its current sales breakdown includes Tommy Bahama, which accounts for 65 percent of sales; Lilly Pulitzer, which is 26 percent, and “emerging brands,” which include Southern Tide, Beauford Bonnet and Duck Head, which are 9 percent of sales. Wholesale for the corporation as a whole accounts for 19 percent of sales, retail is 39 percent, e-commerce is 34 percent and restaurants are 8 percent.