Diddy has a new partner.
Global Brands Group Holding Ltd. has purchased a majority stake in Sean John, the men’s lifestyle brand founded 18 years ago by hip-hop entrepreneur Sean “Diddy” Combs — alternately known as Puff Daddy or Puffy. The deal, the terms of which were not disclosed, also includes Combs’ Enyce brand.
Sean John, which has annual retail sales of around $450 million, as well as the smaller Enyce brand, will become part of CAA-GBG Global Brand Management Group, a division that involves a number of celebrity labels including Jennifer Lopez, Eva Longoria and the Bob Marley Estate, as well as Coca-Cola, Jeep and Hershey’s.
Combs will retain a minority interest — believed to be around 20 percent — and will continue to be involved in the marketing and promotion of the Sean John brand. Jeff Tweedy, Sean John’s longtime president, will remain in his position, and the brand’s current roster of licenses — as well as its exclusive relationship with Macy’s for the sportswear line — will also continue.
“When we started Sean John, it was my dream to build it into an aspirational brand for the young consumer,” said Combs, chief executive officer of Sean John and chairman of Combs Enterprises. “Our new partnership with CAA-GBG provides us the opportunity to reach the Millennial customer on a global level, fulfilling its true potential.”
Two years ago, Combs and Tweedy set plans in motion to build the Sean John label into a $1 billion business, one that would include expansion internationally along with retail stores and the move into more categories. The brand operates under a completely licensed model and currently offers products in 18 categories including suits, dress shirts, ties, underwear, outerwear, fragrance, footwear, watches and boys’ and girls’ apparel, in addition to the sportswear. The sportswear represents about half of all sales, Tweedy said, with the other categories making up the remainder.
However, going head to head with such powerhouse labels as PVH’s Calvin Klein as well as the Polo and Denim & Supply Co. divisions of Ralph Lauren Corp., was hard for the privately held company, Tweedy admitted.
“At Macy’s, those are the brands we sit next to,” he said. “And it’s very difficult to compete against PVH or Ralph Lauren without a strong public parent. So when Puffy and I looked at it, we knew it was time to bring on a partner.”
In 2003, billionaire Ron Burkle injected an estimated $100 million into the brand through his Yucaipa Cos., but that was strictly as an investor, Tweedy said. Global Brands will serve more as an operator. He said with Global Brands’ acquisition, Burkle is no longer involved.
Jason Rabin, president of North America and chief merchandising officer of Global Brands Group Holding, said his company has been working with Sean John for many years — it holds the sportswear license — “and we felt we have a very strong relationship. They wanted a stronger partner so we invested. We feel the brand has a lot of opportunity, not just in the U.S., but globally.”
Tweedy added: “Puffy calls it rocket fuel. We are a successful brand now and this is the rocket fuel that will take it to the next level.”
Rabin said Combs is more than just a celebrity and is a “very successful businessman.”
Unlike many celebrity brands, Sean John has had a long run and will celebrate its 20th anniversary in 2018. “Most critics said we would be done 17 years ago,” Tweedy said, “but we’ve continued to build a true lifestyle brand. People use that word a lot today but when we sat down years ago, that’s what we set out to do.”
Combs added, “Sean John has always had a point of view and a strong sense of purpose. When I think about the whole journey, it truly was a fashion revolution from how things were then and to see the impact we had on style. We made sure we stayed true to our vision, presenting great designs and offering the highest-quality product. And over the past two decades we have grown along with our customer, always making sure to reflect the passion, diversity and aspirational nature of young people.”
Having the support of Macy’s has also been critical to the company’s success. The sportswear has been exclusive to the department store since 2011 and it has consistently ranked among the top men’s brands for Macy’s. In 2014, Terry Lundgren, chairman and chief executive officer of Macy’s, said the brand appeals to guys in their late 20s and 30s and was in high demand in key markets such as New York, Los Angeles, Detroit and Chicago.
Tweedy said in addition to the sportswear, Macy’s carries all of Sean John’s other categories as well. Other retailers including Lord & Taylor and Dillard’s carry the tailored clothing, furnishings and fragrances. He said the deal with Global Brands does not change the distribution model.
Although the brand has operated stores in the past, there are none open now, but that could change under Global Brands. “It would be important to our international growth to be in the retail business,” Tweedy said, but there are no immediate plans.
Rabin said Global Brands “has a very strong international business,” particularly in Europe and Asia, as well as experience managing businesses around the world. In June, the company formed a joint venture with Creative Artists Agency, which created the world’s largest brand-management company.
Since the ink on the Sean John deal is still drying, Tweedy said discussions are just now beginning on a three-year plan that will determine the exact strategy for the expansion of the label. He said he expects that process to be completed within 60 days.
However, he did say that he sees opportunity for Sean John to enter the women’s arena as well as swimwear, small leather goods and hosiery. “And we haven’t really tapped into categories for boys’ and girls’ [wear],” he added.
As for Combs, Tweedy said, “I speak to him three or four times a week. And he’s there when I need him. We’re an established brand so I don’t need him for the day-to-day, but he’ll still be involved in the marketing with Macy’s and Parlux [the fragrance licensee].”
“It’s my name and I will continue to be involved in Sean John and its success,” Combs said. “Just like I do with all my companies, I will use my experience to help shape the strategy and make sure Sean John does everything it needs to shape culture and engage consumers around the globe.”
Although the jewel of the deal is Sean John, Global Brands will also control Enyce, which is a hip-hop brand that was established in New York in 1996 and acquired by Combs in 2008 with support from Burkle and Yucaipa. Enyce is sold primarily at urban specialty stores around the U.S. and will also be developed and positioned for international growth under Global Brands.
Global Brands Group Holding Ltd. is a publicly held company that trades on the Hong Kong Stock Exchange. It was spun off from Li & Fung Ltd. as a separate company in 2014. The Combs deal isn’t its first in the celebrity men’s arena: Global Brands formed a joint venture two years ago with David Beckham and Simon Fuller to expand the Beckham brand into a slew of lifestyle products, including apparel and personal care, worldwide.
In addition to the apparel brands, Combs Enterprises operates Bad Boy Entertainment, Combs Wine & Spirits (Cîroc and DeLeón), Aquahydrate, The Blue Flame Agency, Bad Boy Touring, Janice Combs Publishing, Revolt Films and Revolt Media & TV. Forbes estimated that Combs netted $62 million last year from his business ventures.