gross margins apparel retailers

Dassault Systèmes’ acquisition of PLM provider Centric Software late last week is a move the company said will help meet new market demands for greater speed and more trend-right products.

The software company said the deal will help fashion and luxury brands “accelerate” their digital transformation efforts while allowing for more innovation. “Centric Software’s PLM solutions generate fast ROI for fashion brands to respond to on-trend, on-demand consumers,” the company said in a statement.

The deal calls for Dassault Systèmes taking a majority stake in the private software company. “Under the terms of the agreement, Dassault Systèmes will acquire for cash a majority ownership of Centric Software, which will be comprised of between 58 and 69 percent, depending on the Centric Software shareholders’ election, and an advance payment on the acquisition of the remainder of the shares, which will take place in 2020 and 2021,” the company said.

A dollar amount on the deal was not disclosed. However, Dassault Systèmes said it would consider a total acquisition of the company — pending sales and profitability growth, and would be “comprised of between four and six times 2019 and 2020 revenues.”

Shearman & Sterling LLP served as legal counsel to Dassault Systèmes while Union Square Advisors LLC was the exclusive financial adviser on the deal. For Centric Software, DLA Piper served as legal counsel.

Clients of Silicon Valley-based Centric include Asics, Bass Pro, Auchan, Belle China, Bestseller, Fast Retailing, Kate Spade, Kering Group, Li & Fung, Loblaws, LVMH Moët Hennessy Louis Vuitton, Mango, PVH Corp., Ruyi Group, Ted Baker, Tommy Hilfiger and Under Armour, among others.

Last year, Centric Software’s sales rose more than 60 percent to $61 million while boosting profits. The company said its “industry-specific collaborative PLM platform” is designed for use in “merchandise planning, product specifications, materials management, product sourcing, cost scenarios, collection management, calendar management and quality management, on desktop and also optimized for mobile devices, to increase efficiency, accelerate time-to-market, and improve sales and product margins.”

Bernard Charlès, vice chairman and chief executive officer of Dassault Systèmes, said as the company is “connecting the dots of the value network for customers in 12 industries and 70 segments, we understand the specific needs of the sectors that launch their products by collection.”

Charlès said the deal will allow the company to “accelerate their transformation with PLM and create even more business value with our 3DExperience industry processes. As we did for SolidWorks 20 years ago, we will keep Centric Software independently operated.”

The transaction comes as consumer demands have shifted, the companies noted. Shoppers are more savvy and knowledgeable, “quickly defining and following trends in a world where the digital and physical converge.” As a result, a Dassault Systèmes spokesperson said “competitive apparel and fashion brands are scrambling to meet their expectations for on-trend and on-demand products by increasing the number of collections they produce each year and accelerating their launch.”

Chris Groves, president and ceo of Centric Software, said by partnering with Dassault Systèmes, “Centric Software will have the backing of a world-leading innovation company” that will allow it “to accelerate the development of market-driven innovations to help our customers develop a competitive advantage and fuel growth.”

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