NEW YORK — The bling-bling world of hip-hop is clearly more than a flash in the pan, with more conglomerates than ever eager to get a piece of it. The latest brand said to be entertaining suitors is none other than one that helped pioneer the sector: Rocawear.
Sources said Rocawear may be ready to consider offers for a sale of the company, which is said to generate more than $125 million in wholesale volume.
Four partners own Rocawear, each with a 25 percent stake. They are hip-hop icons Jay-Z and Damon Dash, the co-founders, and Russian investors Alex Bize and Norton Cher, who are said to be open to selling their interests.
“When a brand becomes so profitable, people are definitely going to be acquiring,” Dash said in an interview. “I’m a businessman. The purpose of being in business is to build equity and probably sell. All I can really say is, as a businessman, I’m listening. I haven’t seen Alex and Norton for a while, so I don’t know what they’re looking to do.”
One name that has surfaced as a potential buyer is Tommy Hilfiger, who helped kick off the hip-hop clothing trend in the early Nineties and who reportedly was in talks this spring about acquiring the hip-hop brand Ecko Unlimited. Hilfiger told WWD that his company has had conversations with Rocawear, as it has with other firms, but a deal seems unlikely.
Asked about Hilfiger, Dash said, “I would have to respect the privacy of who I’m speaking to. That would just be bad business.”
There has been speculation that Jay-Z wants to move on from the company, but Dash denied it. “That’s an old rumor,” he said.
A trend of streetwear acquisitions has emerged within the last 12 months as companies recognize the growth potential in the sector. Last year, California billionaire Ron Burkle invested $100 million in Sean “P. Diddy’’ Combs’ company, Sean John, which has embarked on a program of growth involving store openings for its own label, with the first opening on Fifth Avenue late last month and a plan to introduce women’s wear for fall 2005. It also has invested in Zac Posen’s company.
Subsequently, Enyce was bought by Liz Claiborne in December and, in January, Kellwood Co. acquired Phat Fashions and Phat Farm for $140 million in cash, plus significant incentives for Russell Simmons and Kimora Lee Simmons based on the brands’ future growth.
The deals provided these hot hip-hop brands with the capital and infrastructure to further develop their consumer following while giving the more mainstream firms entry into the urbanwear scene.
Meanwhile, the activity throughout the sector continues to heat up. Jennifer Lopez is becoming more involved in her Sweetface Fashions venture following the departure of its former president, Denise Seegal; Eve is preparing for the relaunch of her Fetish line for fall, under license with $350 million Mark Ecko Enterprises, and Missy Elliot has linked with Adidas to create a fashion line for the activewear brand.
Then there’s Beyoncé Knowles, who is developing her House of Deréon: Couture. Kick. Soul. collection in a licensing deal with the $700 million Kids Headquarters based here. Set to launch in fall 2005, The House of Deréon, a “hip haute” label, will appeal to the junior set with sophisticated tastes. The line has been in development for more than a year and features three co-creative directors: Beyoncé, her mother, Tina, and designer Heather Thomson Schindler, who most recently worked with Lopez on the JLo brand at Sweetface Fashion Co. for the past two years.
Rocawear is part of Dash’s conglomerate, The Roc, which is a $500 million firm encompassing brands in fashion and entertainment, including businesses such as Roc-A-Fella records, Armadale Vodka and the C. Ronson for Rocawear clothing line.
Industry analysts estimate Rocawear generates wholesale volume of at least $125 million a year. It has women’s licenses with Signature Apparel Group, Brandon Thomas Designs Inc., M. London, Gina Group and Colors in Optics Ltd.
Jay-Z and Dash began Rocawear in 1999 as a co-venture with the Comet Group, the clothing manufacturer founded in 1984 by Bize and Cher.
“I’ve heard the company is for sale, that’s for sure,” said Andrew Jassin, managing director of the Jassin-O’Rourke Group, a New York consulting firm. “I don’t think the buyer would be a strict financial buyer. I think it would be more strategic than financial.”
This isn’t the first time Rocawear has been the focus of speculation that it might be sold. TKO Apparel, the $200 million Miami-based private label manufacturer, was said in July to be negotiating a deal with Rocawear. TKO Apparel manufactures women’s and men’s pants for brands such as Calvin Klein, Perry Ellis and Izod. Dash does not recall such a deal and said it never happened.
“I don’t even remember that,” he said. “I’m quite sure any business would be interested in Rocawear. If somebody was talking, that doesn’t mean a deal will happen.”
Jassin said he did not know what would motivate Dash to sell.
“But if he could put the business under a more stable or more productive roof, it might prove to be interesting,” Jassin said. “He could capitalize and cash out part of his equity and provide a platform to do additional licensing.”
Jassin said he believes it’s time for the brand to evolve to the changing needs of its customers.
“At this point, people who are wearing hip-hop clothing have to think about working and changing their wardrobe to do different things,” he said. “Brands must migrate. Rocawear has a very good customer franchise. It’s a matter of cultivating it and moving it to the next phase of its development.”
At the moment, Dash shows no signs of slowing down or relinquishing any part of his empire.
“I can multitask. I can do everything,’’ he said. “I just have to work harder. My businesses are like my children. I give them equal attention. Overall, I’m having a ball.”