Isaac Mizrahi brand sold to WHP Global in $68 million deal – WWD

Isaac Mizrahi, the brand with the big personality behind it, is aiming for another phase of growth thanks to a new owner.

Xcel Brands Inc. sold a 70% stake in the Mizrahi brand to WHP Global, a brand management company that quickly built up its portfolio, for $46.2 million in cash, valuing the Mizrahi business at $68 million of dollars.

Xcel retains a 30% minority stake in the Isaac Mizrahi brand and continues to manage Mizrahi’s QVC business with WHP Global. Xcel has also entered into a new licensing agreement to design and distribute Isaac Mizrahi apparel in the United States and Canada.

Mizrahi continues to serve as design director of his eponymous brand. “I’m very excited to harness the power of my brand. I couldn’t ask for better partners,” he said in a statement.

New York-based WHP Global owns Anne Klein, Joseph Abboud, Joe’s Jeans, William Rast, Toys “R” Us, Babies “R” Us and Lotto, the Italian athletic apparel and footwear brand. The company also owns WHP+, a direct-to-consumer digital e-commerce platform for brands, and WHP Solutions, a sourcing agency in Asia.

“Isaac Mizrahi is an opportunistic and complementary acquisition to our fashion business, which represents well over $1 billion in sales,” Yehuda Shmidman, chairman and CEO of WHP Global, told WWD on Tuesday, when l agreement has been revealed.

Yehuda Shmidman
Courtesy picture

Shmidman said the deal signals “the next phase of growth for fashion house Isaac Mizrahi. We see significant opportunities to grow the brand by leveraging WHP Global’s platform and the reach of our vertical.” of fashion.

The Isaac Mizrahi brand includes activewear, footwear, handbags, watches, eyewear, tech accessories, homeware and other items. The brand is sold in department stores such as Saks Fifth Avenue and Hudson’s Bay; interactive television, including QVC and The Shopping Channel, as well as national specialty channels. It is also sold overseas in Canada, Italy, the UK and Japan.

Isaac Mizrahi brand sold to WHP

Isaac Mizrahi

Executives involved in the deal estimated that the Mizrahi brand over its 35-year history generated more than $2.5 billion in sales, including about $1.5 billion during its five years with it. Target until 2009. The brand has had some setbacks, but has been growing recently. He has maintained a high profile thanks to the personality of the designer who knows how to work with a crowd and engage his audience, whether they are at home watching it sell on QVC or getting closer to the one of his in-store appearances – or a past cabaret. nights at the Carlyle Hotel in Manhattan.

After working for Perry Ellis, Calvin Klein and others, Mizrahi launched her own collection in 1987, later winning four awards from the Council of Fashion Designers of America. In the past he has dressed famous women such as Michelle Obama, Oprah Winfrey, Audrey Hepburn, Meryl Streep, Rihanna, Julia Roberts, Anne Hathaway and others. Besides fashion design, he has worn many other hats, as a cabaret entertainer, film actor, writer, singer, entertainer and TV talk show host. He starred in the documentary “Unzipped” and was a “Project Runway All-Stars” guest judge.

“We can really take the brand around the world, into new international markets, that’s what we’ve done with Anne Klein and Joseph Abboud, and what we’re doing now with Joe’s Jeans and, of course, what we are doing with our other verticals with Toys ‘R’ Us and Lotto,” Shmidman said.

He said about 50% of WHP’s $4.25 billion in business is outside of the United States. “We have a very diverse global business. We now have over 125 licensees. We are very present in Europe and the Middle East, very much in Asia and Latin America. We could certainly see Isaac’s mark in China, Japan, [South] Korea, through [more] parts of Europe and the Middle East.

When asked to characterize Isaac Mizrahi’s brand recognition outside of the United States, he replied, “It’s mixed. We have work to do with certain markets to tell the story. But there are certain markets that really know it.

Robert W. D’Loren, President and CEO of Xcel Brands, discussing the rationale for selling Isaac Mizrahi, told WWD, “Now is the time. We’ve been working on it for 11 or 12 years. Our job here is to create value, to create value in our brands and to create value for our shareholders and for other stakeholders, including our employees. It was the perfect time to pull off a capital markets event.

“It’s not that we think there’s no more growth with the brand,” D’Loren added. “Rather the other way around. We think there are international opportunities. We appreciate WHP’s global footprint. It’s better than back home. world, this is a very good time to deleverage our balance sheet. We are reducing our debt to zero.

Isaac Mizrahi brand sold to WHP

Robert D’Loren

D’Loren said there were around 50 licenses under the Isaac Mizrahi name. “It’s a strong licensing portfolio ranging from apparel to footwear to handbags and many ancillary categories that we have licensing partners with… When we acquired Isaac Mizrahi, it was generating around $30 million. dollars in retail sales. Today, it is approaching $400 million.

In the future, Xcel will introduce an Isaac Mizrahi dress collection, which does not exist today.

Gilbert Harrison, President of Harrison Group, said, “WHP’s acquisition of a 70% stake in the Isaac Mizrahi brand certainly leverages their existing platform and presents a great opportunity for them. However, as a consultant and financial advisor to Xcel Brands, this transaction presents an exceptional opportunity for Xcel Brands. It must be realized that the net worth of Xcel before the announcement was three and a half times less than the full valuation of the brand and Xcel not only retains a 30% stake in this brand, but also now has debt free liquidity. nor excess. working capital which will allow them to focus on building their existing brand portfolio which includes, among others, Halston, Judith Ripka, Lori Goldstein, C Wonder and also Longaberger which has enabled Xcel to develop its expertise in digital shopping live.

Shares of Xcel were trading at $1.16 on the Nasdaq before the deal was announced, giving the company a market capitalization of $22 million. After the announcement, shares closed up 37%, or around $0.40, at $1.49.

Shmidman co-founded WHP in 2019 with Oaktree, alongside the purchase of Anne Klein, WHP’s first brand acquisition. “We brought in Black Rock afterwards. We also have other funders,” Shmidman said.

WHP is a direct competitor to Authentic Brands Group, another major brand management company.

“We buy brands that are already excellent. We are not inventors” of brands, Shmidman explained. “We are investing in the expansion of the distribution of these brands in the world with partners across the planet. We review fashion opportunities every day of the week, possibly except Saturdays. We are absolutely in the market for more fashion acquisitions.

“Count on us to complete another acquisition this year,” added Shmidman. “It could actually be a new vertical. We look at bolts and new verticals. We have over $100 million of cash on our balance sheet after this deal. We have plenty of firepower to invest in amazing brands that still have growth opportunities.

WHP’s last acquisition was Joe’s Jeans. “We are moving very quickly. We have a great team and very serious capital behind us. We really think big. Now is the time to be very active, to place our investments in brands that are not going to disappear. We have the ability to move very quickly.

Meanwhile, Xcel does not plan to monetize other brands. “Not now,” D’Loren said. “It takes time to really build brands, where we think it makes sense to consider that.”

The deal leaves Xcel with more than $17 million in cash and $22 million in working capital on its balance sheet, D’Loren said.

“Right now we’re very focused on Halston. It works extremely well. Netflix was a game-changer for us in terms of raising awareness for a new generation,” D’Loren said, referring to the Netflix series about the designer.

“We’re also very focused on our C. Wonder brand,” D’Loren added. “You will soon hear an announcement, about the retail commitment and a famous designer who will support it.”

The company also invests in live streaming and also owns Judith Ripka and Lori Goldstein’s Logo, as well as a minority stake in the Isaac Mizrahi brand. It also owns and manages the Longaberger brand through its controlling interest in Longaberger Licensing LLC. The company’s brands have generated more than $3 billion in retail sales through live streaming on interactive TV and digital channels alone.