Trading giant Li & Fung Ltd. continues to rack up deals this year, acquiring the Oxford Apparel Group division of Oxford Industries Inc. for $121.7 million.
Li & Fung USA, the New York-based subsidiary of Hong Kong-based Li & Fung, has signed a definitive agreement to purchase substantially all of the assets of Oxford Apparel. The division owns the Ely, Cattleman and Cumberland Outfitters brands, as well as a two-thirds interest in the Hathaway trademark. It also produces apparel under the licensed Dockers and United States Polo Association brands and operates private label programs for Macy’s, Target, Sears and Costco.
Oxford Apparel is the second-largest division of Oxford Industries, and the sale will allow Oxford Industries to focus on building its key branded divisions, Tommy Bahama and Ben Sherman, as well as its tailored clothing division, Lanier Clothes.
The transaction is expected to close by the end of the calendar year. The Oxford Golf brand and a distribution center in Lyons, Ga., which are part of Oxford Apparel, are not involved in the deal and will remain with Oxford Industries.
“We believe the strong balance sheet and increased liquidity that will result from this transaction will provide us with additional capacity to aggressively develop our key lifestyle brands,” said J. Hicks Lanier, chairman and chief executive officer of Atlanta-based Oxford Industries. “At the same time, we will have the financial flexibility to pursue acquisitions and opportunistically enhance our capital structure.”
Lanier said on a conference call with analysts that the company will invest in new retail stores, international expansion and additional development of e-commerce for Tommy Bahama and Ben Sherman. For the last fiscal year, ended Jan. 30, Tommy Bahama comprised 45 percent of the company’s sales, Oxford Apparel was 28 percent, Lanier Clothes was 14 percent and Ben Sherman was 13 percent.
Asked by analysts if Oxford Industries planned to also unload the legacy Lanier Clothes division, Lanier said the division was not for sale and was performing well and generating meaningful cash flow.
Oxford Industries expects a gain of about $2.80 per diluted share on the sale of Oxford Apparel. For the third quarter ended Oct. 30, Oxford Industries raised its earnings guidance to approximately 33 cents per share, up from previous guidance of 25 cents to 30 cents. Total sales in the quarter are forecast at $205 million.
Li & Fung declined to comment on the acquisition of Oxford Apparel. The conglomerate has been on a deal-making spree this year. Last week, Li & Fung USA said its Music Entertainment Sports Holdings unit will launch men’s and women’s multidepartment lifestyle brands at Kohl’s next fall with Jennifer Lopez and Marc Anthony.
In August, Li & Fung acquired Great Neck, N.Y.-based Jimlar Corp, which owns the Frye, Mountrek and RJ Colt footwear brands, as well as producing shoes under license for Coach and Calvin Klein. Also that month, the company acquired China-based Kenas Furniture Group. At the time, Li & Fung president Bruce Rockowitz said that the company retained a “war chest of over $1 billion,” and the “pipeline of deals will remain strong.”
In July, Li & Fung disclosed three acquisitions worth a total of $140 million, including the purchase of Hong Kong-based Jackel Group in the beauty sector, Hong Kong-based HTP Group in the jeanswear market, and New York-based Cipriani Accessories and its affiliate, The Max Leather Group.
Earlier in the year, LF USA inked deals with Rachel Zoe to create a lifestyle fashion brand, signed a license to produce Sean John men’s sportswear and expanded its licensing arrangement with mixed martial arts brand Tapout.