Rachel Roy got her wish.
Topson Downs of California is set to acquire a majority stake in the Rachel Roy brand for an undisclosed amount. An agreement has been reached in principle, and the transaction is expected to close shortly.
Topson has reached an agreement with The Jones Group Inc., now owned by private equity firm Sycamore Partners, to acquire its 50 percent stake in the business. As reported, Jones had tried to sell the Rachel Roy business to private equity firm Bluestar Alliance for $14.6 million. Topson is also set to acquire a small stake owned by TSM Capital, which combined with the Jones stake will give Topson majority ownership of the Rachel Roy brand. Rachel Roy along with ex-husband Damon Dash each still own a stake in the business.
Topson, a privately held apparel firm based in Los Angeles, also will own the trademarks to the Rachel Roy brand, while the designer Rachel Roy will retain 100 percent creative control of her name. The two will form a partnership to develop the fashion brand Rachel Roy.
Daniel Abramovitch, chief executive officer of the Rachel Roy business and a partner at Topson, said, “We’ve never had a vehicle before that touched customers directly. We’ve had opportunities to purchase brands, but not one was a perfect fit in the white space in the [Macy’s] Impulse contemporary customer.”
He said the initial focus following the closing of the deal will be on the contemporary Rachel Rachel Roy line sold exclusively at Macy’s, after which attention will turn to relaunching the Rachel Roy designer brand.
The Rachel Roy operation will be based in New York. The expectation is that many of the employees who worked at the designer component of the business, which Jones shuttered, will be rehired.
Roy, who will continue as chief creative officer, said she is “thrilled to be working with my new partners and we already have a president in place so we can hit the ground running.”
That individual is Denise Johnston. With over 25 years of experience in the industry — her past positions include posts at Liz Claiborne, Emma James, Gap Adult North America, Macy’s, Neiman Marcus and Dayton Hudson — she will oversee all aspects of the lines, including growth and future licensing opportunities.
Topson has partnerships with the major retailers, and while it does men’s, women’s and kids’ in sportswear and denim, its primary focus is in the juniors category, along with a heavy dose of product in the wider contemporary space.
According to Abramovitch, Topson is involved in the design and production of product for the American Rag, Bar III and Material Girl private label lines at Macy’s Inc. The company also produces apparel brands for Target Corp., including product for Mossimo.
In acquiring Rachel Roy, the Rachel Rachel Roy contemporary line will allow Topson to further its partnership with Macy’s in the contemporary space. At Macy’s, that’s the Impulse contemporary department. The other “brands” under the Topson umbrella are essentially private label lines — it has annual volume of $400 million — and the Rachel Roy acquisition represents the first real “brand” for the company. Abramovitch doesn’t rule out the possibility of Topson acquiring more brands down the road.
Jeff Gennette, president of Macy’s Inc., said, “Rachel is an extraordinarily talented designer with a creative vision that resonates with the Macy’s customer. She and her team are committed to defining a style that is fresh and differentiated. We are confident that the Rachel Rachel Roy brand will excel in the context of the Topson Downs organization.”
Word surfaced that there was trouble with Roy and Jones in January when financial sources said Bluestar was in talks to acquire the brand. Those talks were ongoing before Jones inked its deal in December to be acquired by Sycamore for $2.2 billion. While those discussions were taking place, rumblings surfaced that Roy was trying to buy back her company.
In April, Roy filed a lawsuit to stop Jones from selling her business to Bluestar, a move she said was without her consent. The lawsuit, filed in a New York state court in Manhattan, alleged breach of contract. Neither Sycamore nor Bluestar were named as defendants in the suit.
Roy entered into interrelated agreements with Jones in 2008 to develop and sell products under the Rachel Roy brand. Those agreements include the transfer of intellectual property assets, and the hiring of Roy per an employment agreement.
A month after the lawsuit was filed, New York Supreme Court Justice Jeffrey Oing granted Roy a preliminary injunction to bar Jones from proceeding with the sale. That allowed Roy’s lawsuit to proceed to trial.
With the sale of the business to Topson, the legal matter between Roy and Jones has been settled.