Daily Newsletter

11 September 2023

Daily Newsletter

11 September 2023

Signal: WHP Global acquisition will get G-Star Raw ‘back on its feet’

WHP Global’s acquisition of denim label G-Star Raw could pave the way for an ambitious global expansion and the brand’s resurgence after its financial crisis in recent years, according to an industry expert.

Isatou Ndure

Global management company WHP Global recently acquired Dutch denim brand G-Star Raw which will aid the brand’s ambitious US and worldwide expansion plans.

Inside the WHP Global & G-Star Raw deal

The acquisition is said to place the brand in a new phase of development whilst allowing WHP Global, known for its rapid expansion and brand management expertise, to continue building on its portfolio of labels that are currently generating over $7bn in retail sales.

G-star Raw plans to use WHP Global’s expertise to accelerate its global footprint in the US and explore new territories and product categories.

WHP Global will ensure the continuity of the G-Star Raw’s leadership and operations including the existing shareholders of G-Star Raw, such as Jos Van Tilburg who will maintain his stake in the Dutch brand.

CEO Rob Schilder will continue to oversee critical functions such as marketing, product development, wholesale, retail, and e-commerce distribution from the brand’s Amsterdam headquarters.

Van Tilburg commented: “In WHP Global, we experience the right strategic and financial partner for further global and sustainable growth in the decades to come while staying true to our signature product, our dedicated teams, and our loyal business partners.”

Here’s why the deal matters

GlobalData analyst Louise Deglise-Favre tells Just Style the acquisition will help G-Star Raw get back on its feet after the financial difficulties it faced in 2020.

The challenges caused by the pandemic resulted in a 10% cut to the clothing company’s global workforce. The pandemic also affected the brand’s physical stores and accelerated its transition to digital e-commerce in July 2020. This resulted in G-Star Raw restructuring its store portfolio in several regions.

The restructuring plan came after G-Star Raw’s US unit filed for Chapter 11 bankruptcy protection following a decision in May 2020 by the brand to reportedly enter into voluntary administration in Australia. G-Star Raw confirmed in August 2020 that administrators had been unable to find a buyer for its Australian store estate, meaning all of its stores in the country had been closed.

WHP Global on the other hand has been on the hunt for opportunities. For example, it struck a deal with apparel retailer Express in April this year to buy menswear brand Bonobos for $75m. The deal was seen as an opportunity to unlock additional growth for the menswear brand and expand fashion apparel retailer Express’ fully integrated omnichannel operating platform.

WHP Global made a greater investment of $50m, while Express acquired the operating assets and assumed related liabilities of the Bonobos business for $25m.

At the time Yehuda Shmidan, WHP Global’s chairman and CEO said: “Bonobos is an ideal first acquisition for our new partnership with Express and will be a terrific addition to our fashion vertical.

This was the first acquisition made by both companies since they formed an intellectual property joint venture in 2022, valued at approximately $400m with WHP investing $235m for 60% ownership of the company.

Shmidan also added: “Post-closing, WHP Global’s portfolio will include more than 10 powerful brands approaching $7bn in total retail sales.”

The brand management firm saw the partnership with Express as a global growth potential to give it a distinct competitive edge as it looked to acquire more consumer brands.

Deglise-Favre shared that whilst the support of WHP Global will be beneficial to G-Star Raw, “the brand must also rejuvenate its brand image and product offering if it wants its new attempt at global expansion to be successful.”

G-Star Raw and WHP Global did not respond to Just Style’s request for comment at the time of going to press.

WHP Global was only founded in 2019, however it is growing quickly and currently has 10 brands under its umbrella.

Its first acquisition was with the global fashion brand Anne Klein from Premier Brands Group in 2019. During this time it said it took the brand under its wing to sharpen its focus on driving growth with key retailers in the US, including Macy’s, as well as investing in marketing, social media, and digital commerce to drive increased brand engagement.

In 2021, it closed a $115m deal with Tailored Brands for the sale of Menswear brand, Joseph Abboud. In conjunction with the transaction, Tailored Brands had entered a licensing agreement with WHP Global for the exclusive rights to sell and rent Joseph Abboud branded apparel and related merchandise in the US and Canada.

In the same year, it entered into a deal with Centric Brands to buy denim brand Joe’s Jeans in which the brand management firm owned the worldwide intellectual property in all global territories other than China, whilst Centric Brands continued to operate the brand’s core categories and geographies across retail, wholesale, and e-commerce channels.

Last year (June 2022) it purchased a controlling 70% interest in fashion brand Isaac Mizrahi from Xcel Brands, Inc. The deal was worth $68m and comprised $46.2m in cash that went to Xcel, a media company specialising in livestream shopping and consumer products, who maintained a 30% minority stake in the Isaac Mizrahi brand.

Key takeaways for the fashion industry

In the past few years, the apparel industry has experienced a surge in merger and acquisition (M&A) deals as companies seek to adapt to the challenges of the constantly changing economic landscape and supply chain constraints in the face of the cost of living crisis and reduced demand for fashion.

According to GlobalData’s Apparel M&A Deals Q2 2023 report, 89 global apparel sector deals were recorded in Q2 2023, which is 41% higher than the previous quarter and 39% higher than the previous year.

The highest value deal was JD Sports‘ acquisition of Courir France for $572.4m, followed by Fielmann‘s $112.3m deal to acquire SVS Vision.

Fashion brands and retailers often use M&A to increase profitability by purchasing struggling brands. For instance UK sports retailer JD Sports acquired the remaining 40% stake of Marketing Investment Group S.A (MIG), making it the sole owner of the Poland-based retailer in a bid to accelerate its expansion across Central and Eastern Europe.

In another case, Frasers Group, which owns sports and fashion brands, including Sports Direct reported a “record” 15.8% increase in revenue, reaching £5.6bn ($7.2bn) for FY23 with pre-tax profits doubling thanks to its growing brand portfolio.

Global expansion is a goal for many companies in the retail sector as they look to either focus on their top brands or like WHP Global, hunt for more.

PVH Corp inked a definitive agreement to sell certain intellectual property and other assets of its Heritage Brands business to Authentic Brands Group (ABG) in 2021. The $220m deal allowed PVH to focus on its global growth brands Calvin Klein and Tommy Hilfiger.

Beyond financial considerations, changing consumer preferences also play a huge role in shaping the industry. Global e-commerce retailer Amazon announced in August it was streamlining its private-label clothing brands, with experts suggesting it had not been able to use its power or knowledge to outcompete other fashion brands.

Other fashion groups have also made the decision to reduce what they offer to ensure their key brands are a success. Last year fashion group N Brown did this to focus on delivering growth to its Simply Be, JD Williams and Jacamo brands.

At the time, N Brown said, “Focusing on growth through three strategic brands (JD Williams, Simply Be and Jacamo), will allow us to boost simplicity and rigour of execution and deliver strong customer propositions and efficiency in our marketing.”

As a result there will continue to be huge opportunities available for the likes of WHP Global which seeks to acquire brands and help them expand their presence in both new and existing markets.

Our signals coverage is powered by GlobalData’s Thematic Engine, which tags millions of data items across six alternative datasets — patents, jobs, deals, company filings, social media mentions and news — to themes, sectors and companies. These signals enhance our predictive capabilities, helping us to identify the most disruptive threats across each of the sectors we cover and the companies best placed to succeed.

Traditional AI is here to stay in the retail and apparel space

Initially, retailers used AI for basic tasks, including inventory management and demand forecasting. However, its usage has now become more prevalent in other aspects such as personalized marketing, customer service, pricing optimization, and supply chain management. With the rise of ecommerce and the increasing importance of data-driven decision-making, AI adoption in retail and apparel has accelerated. The industry now relies on AI to enhance the shopping experience, optimize business operations, and gain an overall competitive edge.

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