BANKRUPT JOAN & DAVID SOLD TO INVESTMENT GROUP

Byline: David Moin

NEW YORK — Joan & David has struck a deal to be sold for $17.5 million to a new investment group with ambitious plans to revive the struggling brand.
“The brand has not been fully utilized,” stated Skender Perolli, a former Escada executive who is part of the investment group, International Brand Development, which is a new corporation formed to buy Joan & David and possibly other brands. Its shareholders include Structured Capital Group Inc. and Perolli.
“There’s great potential in growing the ready-to-wear, fragrances and the wholesale business. The ready-to-wear has not been treated as seriously as it should, but shoes obviously would be the number-one focus. We plan to hire some more designers, try to keep the traditional look in place and add a little more fashion to the line, and improve the fit. The quality has been there for many years.”
The deal was disclosed Thursday by Newmark Retail Financial Advisors LLC, which arranged the sale and has been restructuring Joan & David since it went bankrupt last March. Joan & David has downsized through the sale of assets, including inventories and leases, as well as shuttering about 20 boutiques and outlets. It’s shrunk to about a $50 million company, from $80 million last year.
Joan & David signed a letter of intent for the sale of its assets — including the Joan & David boutiques and outlets, concession arrangements, certain foreign operations and international trademarks — to International Brand Development.
The Joan & David deal, in the form of cash and convertible notes, is subject to higher offers at a bankruptcy court auction, currently scheduled for September.
“We’re prepared to go higher, but the price has to still make sense,” Perolli said. He said his group will add $5 million for working capital.
The deal spells the end of Joan and David Helpern’s control of the company they founded. Perolli intends to be chief executive officer and hire a new chief operating officer and chief financial officer, as well as new designers.
“I think in the restructuring stage we want to make sure all the people are in the right places. People just got comfortable where they are.”
He said Joan Helpern is “definitely going to be in the business, as chief designer of shoes. We are going to hire her a design team. She will be designing and will have great input in the shoe business.” Her husband, David Helpern Sr., is expected to exit the business.
Perolli also said he is in discussions with a rtw executive from another company about joining Joan & David, but declined to specify who.
Joan & David distributes its merchandise through 60 locations in the U.S., Europe and Asia, and reported $4.73 million and $4.02 million in sales for April and May, respectively, and $716,000 and $384,000 in EBITDA (earnings before interest, taxes, depreciation and amortization) for the same periods.
Other major projects by Newmark include the $500 million liquidation of Upton’s in the South. Newmark is also an adviser on the bankruptcy of Roberds, a Midwest electronics and furniture retailer.
Until the end of last year, Perolli was a senior executive in operations and general management for Escada U.S. He said he was with Escada for 12 years, and before Escada, he worked with Chams, a young men’s apparel company, and Merona. He has been eyeing Joan & David for three years. Joan Helpern has been trying to sell her company for almost as long.
Perolli said his investment company will seek to buy other high-end designer brands ranging from $20 million to $300 million in annual volume, provided they complement Joan & David.
He also wants to open 50 to 100 Joan & David in-store shops in two years, primarily for shoes, and possibly roll out activewear, fragrances and cosmetics.

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