The deal for Joseph Abboud is signed and the victor is WHP Global.
On Friday, before the open of the stock market, Tailored Brands, which acquired the Joseph Abboud brand in 2013 for $97.3 million, said it has agreed to sell the business to the newly formed brand acquisition and management firm headed by Yehuda Shmidman, for $115 million.
Shmidman, who serves as chief executive officer of WHP Global, was the former ceo of Sequential and started the company backed by a $200 million equity commitment from funds managed by Oaktree Capital Management. WHP’s first deal was to acquire Anne Klein for an undisclosed sum last year.
Under the terms of the deal, Tailored Brands has also entered into a licensing agreement with WHP for the exclusive rights to sell and rent Joseph Abboud branded apparel and related merchandise in the U.S. and Canada.
Joseph Abboud, the man, who serves as chief creative officer for Tailored Brands, will be exiting the company at the end of the month. Where he fits into the picture under the label’s new ownership structure remains to be seen. The fate of his flagship on Madison Avenue is also unclear at this point.
“I want to thank Tailored Brands for our partnership over the past eight years,” Abboud said. “We’ve accomplished a great deal together as we’ve built one of the leading men’s wear brands in the U.S. and Canada.”
Tailored Brands will continue to own and operate the factory in New Bedford, Mass. The agreement is expected to close by the end of March.
“The Joseph Abboud brand has played and will continue to play an important role in the assortment at our retail brands and we look forward to our new partnership with WHP and to the next phase of our relationship with the designer Joseph Abboud,” said Tailored Brands president and chief executive officer Dinesh Lathi. “This transaction allows us to unlock value in the Joseph Abboud trademarks through an experienced partner that will focus on building the brand through international and category expansion. We plan to use the proceeds from the transaction for debt repayment, which will strengthen our balance sheet and provide additional financial flexibility to invest in our customer-facing transformation strategies.”
As reported exclusively by WWD in December, Tailored Brands has been struggling the past few years as it attempts to navigate the more-casual workplace. Add to that the fact that following the acquisition of competitor Jos. A. Bank for $1.8 billion in 2014, the retailer now carries a total debt load of $2.1 billion, according to S&P Capital IQ, which factors in long-term debts and lease obligations.
Most of the executives who had been running the company at the time of the Bank acquisition have exited, including Doug Ewert, former ceo, who left at the end of 2018 and was succeeded by Lathi, who had been executive chairman of the board. Other long-time executives are also gone including Scott Norris, the one-time president and chief merchant of the flagship Men’s Wearhouse division, and Mary Beth Blake, the president of Jos. A. Bank, who left at the end of last year.
Although the purchase price for the Abboud brand won’t make much of a dent in the company’s debt load, it’s an indication to Wall Street that the new management team is at least prepared to make some bold moves to reverse its fortunes.
As reported, the Joseph Abboud brand had garnered quite a bit of interest among brand marketing firms with companies ranging from Marquee Brands and Sequential Brands Group to Bluestar Alliance negotiating to acquire the brand. However, WHP’s terms, which reportedly included a longer licensing deal, tipped the scales, sources said.
According to Shmidman, “With over 30 years of heritage, the Joseph Abboud brand has cemented its position as one of the most established and trusted brands in fashion. We are excited to have the opportunity to invest in the next chapter of growth for the brand in close partnership with Dinesh and his team at Tailored Brands, and around the world with current and future partners.”
Following the close of this transaction, WHP will have over $1.4 billion in retail sales across its portfolio of brands including Anne Klein and Joseph Abboud.