US: Jones mulls sale of jeanswear unit to Delta Galil
Jones Group's jeanswear brands include Gloria Vanderbilt
Apparel and footwear company Jones Group Inc today (11 October) confirmed it is mulling the sale of its jeanswear division to Israeli apparel and lingerie maker Delta Galil Industries Ltd for up to $400m.
The New York based company, whose jeanswear brands include Energie, l.e.i., and Gloria Vanderbilt, said it expects talks with Delta Galil to be completed within a month.
As well as several of Jones Group's owned brands, the deal is also likely to include licenses to other brands related to the jeanswear business.
The sale would mark a full-circle for Delta Galil's CEO Isaac Dabah who sold the Gloria Vanderbilt jeanswear business to Jones Apparel Group in 2002 for $100m and subsequently became group CEO of the Gloria Vanderbilt and l.e.i. Divisions.
It will also expand Delta Galil's business into new categories and boost its sales in North America. The Israeli firm currently specialises in intimate apparel, underwear, bras and socks, children's wear, leisurewear and nightwear for customers including Marks & Spencer, Target, Wal-Mart, JC Penney, Calvin Klein, Nike and Hugo Boss.
Jones today stressed that a deal has not yet been reached and there is no guarantee that a transaction will result from the discussions. But with a potential sale expected to fetch between $350m and $400m, it said it would use a substantial portion of the proceeds to repurchase shares.
The company, whose brands also include Nine West and Anne Klein, Jones New York, Kurt Geiger and Rachel Roy, added that it does not intend to make any further comments until an agreement has been reached or discussions terminated.
In July, the apparel and footwear firm posted a steep drop in second quarter profit to US$5.2m from $25.7m, impacted by the cost of recent acquisitions including Stuart Weitzman and UK shoe retailer Kurt Geiger. But revenues edged up 3.3% to $888m.
Tel Aviv based Delta Galil, meanwhile, managed to shrug off softness in the US mass market to book a 23% jump in second quarter profit to $5.6m as sales climbed 2% to $160.2m. In July it acquired assets of sleepwear brand KN Karen Neuberger, from Russell Newman Brands in a deal worth US$4m.
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