LVMH TAKES CONTROL OF U.K.’S THOMAS PINK
Byline: Katherine Weisman
PARIS — LVMH Moet Hennessy Louis Vuitton has buttoned up another deal, taking a majority stake in upscale British shirtmaker Thomas Pink.
LVMH announced the transaction Friday — right on the heels of yet another deal, its minority stake in Joseph, the U.K. fashion house. Like Joseph, LVMH’s venture capital arm LV Capital made the investment in Thomas Pink.
Terms of the deal were not disclosed, but industry sources said that LV Capital would have a stake nearing 75 percent in Pink. Pink has annual sales of about $41 million, according to industry estimates, and was reportedly being pursued by other suitors, including Gucci and American shirtmaker Phillips-Van Heusen.
LVMH said that it would invest further in Pink to “accelerate the company’s plans to open additional stores outside the United Kingdom, especially targeting major cities in the U.S. and Europe.” Pink currently has 20 stores, 13 of which are in London. There are other Pink units in the U.K., Ireland and the U.S., where the label has a 6,000-square-foot store on Madison Avenue and a 2,100-square-foot store in Manhasset, Long Island, N.Y.
Founded in 1984 by brothers James, John and Peter Mullen, Pink made a name for itself in the men’s dress shirt and neckwear markets with its trademark bright colors, catchy name and effective international marketing.
The LV Capital purchase puts an end to rumors circulating in London that Pink might pursue an initial public offering.
“Pink is an interesting company because of the quality and variety of the merchandise, the unique distribution concept and the merchandising,” said Daniel Piette, president of LV Capital, in an interview. These factors make Pink the only company of its kind in the luxury shirt market, Piette explained, noting that the “existing management team will remain central to the brand’s future.”
“We are very excited about Thomas Pink’s future and believe our partnership with LVMH will yield significant synergies in the rollout of Thomas Pink worldwide through a variety of distribution channels,” said Des Swan, chief executive officer of Pink, in a statement. Piette also was enthusiastic about Pink’s niche in the upscale segment of the men’s wear industry, where LVMH is a quiet player. Many of LVMH’s fashion brands, including Givenchy, Celine and Kenzo, or Arnault-controlled Christian Dior, have solid men’s wear collections, but the group’s image is that of a dominant player in the women’s designer fashion segment.
This is not the first time LV Capital has dabbled in men’s wear. In February, the firm took a 24 percent stake in Pyramid Sportswear, whose only asset is Gant. LV’s competitor for Pink, Phillips-Van Heusen, is also a minority shareholder in Pyramid.
LVMH observers view the Pink deal favorably. It gives LVMH chairman Bernard Arnault another niched, upscale brand, an entry into men’s wear and a small but growing retail network.
“Pink bridges the gap between consumer goods and luxury goods,” said one equities analyst. While Pink is not a designer brand, it carries a prestigious image.
Others noted that while many companies are bidding for designer firms, pushing purchase prices “through the roof,” LV Capital seems to be successfully making inroads into this lucrative nondesigner sector of the market. Case in point: LV Capital’s 10 percent stake in Joseph, which is said by the acquiring parties to earn a pretax margin of 20 percent on volume of about $72.5 million. Belgian financier — and Arnault ally — Albert Frere took a 54 percent share in Joseph, while the company’s new president, Robert Bensoussan, holds an 18 percent stake. Brothers Joseph and Franklin Ettedgui own 18 percent of the firm they founded.
Pink’s margins could not be learned, but they are believed to be high. Thanks to manufacturing in Northern Ireland, Pink manages to get a few tax breaks.
LVMH consistently describes LV Capital as purely an investment company, but one analyst feels it has a more important function, enabling LVMH to test out new industries, like men’s wear. But some investments that LV Capital has made have eventually been integrated into LVMH. La Brosse et Dupont, a brush and toiletries firm acquired by LV Capital at the end of 1998, is now part of the group’s beauty division, the analyst noted.
“Everything they do in lower ends of market, they put it in LV capital,” the analyst observed. “It doesn’t shock the market and it gives them flexibility.”