credit: WWD
Sander's New Chapter: Prada to Sell Brand To London Equity Fund
By Miles Socha
Luc Vandevelde
MILAN — Only three days after Raf Simons showed his first women's wear collection for Jil Sander, the company is about to undergo another seismic change — new ownership.
Change Capital Partners, a London-based private equity fund headed by former Marks & Spencer chief executive Luc Vandevelde, is buying Sander from Prada Group, WWD has learned.
According to market sources, Change Capital intends to keep Simons and his creative teams, and not invite back the founding designer, who twice parted ways with Prada Group after selling her company to the Italian firm in 1999.
Sander's management, led by ceo Gian Giacomo Ferraris, also is expected to remain intact while the new owner leverages what it sees as high growth potential for the brand.
The deal, which could be announced as soon as today, could signal a new wave of mergers and acquisitions for the fashion and luxury sector (see related story, next page).
Details of the transaction could not immediately be learned, but it is believed the purchase price could be around 100 million euros, or $119.1 million at current exchange.
Prada Group is said to have held talks with several potential buyers for Sander, including other cash-rich European equity players. It also is understood several parties have expressed interest in the Prada-owned Helmut Lang business.
London-based Change Capital — a 300-million euro fund backed by the Halley family, major shareholders in French retailer Carrefour — clearly has stated its interest in fashion and retail concerns. Last October, it backed the buyout of Republic Retail Ltd., the young adult fashion retailer with 76 locations in the U.K., for 105 million pounds, or $183.2 million.
In an interview last year, Vandevelde told WWD: "Companies with a market-leading product and/or a strongly differentiated customer that offer platforms for growth [are the best investment opportunities].
"Companies that have embraced multichannel strategies and made them work, with robust distribution and fulfillment infrastructures, will rightly be seen by investors as attractive," he said then. "[We] are looking for companies where we can take controlling positions and can identify and create platforms for consolidation and growth."
According to its Web site, Change Capital focuses on middle-market investments that leverage its expertise in retail and consumer industries. It aims to invest between 10 million and 15 million pounds, or $17.4 million to $26.2 million, per transaction.
Its portfolio of companies includes home improvement retailer Robert Dyas Holdings Ltd., window blinds concern Hillarys Group and Buksesnedkeren ApS, a Danish firm that markets the H2O and Signal brands of leisure apparel.
It could not be learned if Vandevelde plans to take an active role in the Sander company. A savvy, international, decisive executive, he has limited experience in luxury goods and is considered a retail-oriented manager. He oversaw a significant — and much-criticized — overhaul of the struggling Marks & Spencer, prior to which he ran French food retailer Promodes, which ultimately was acquired by Carrefour. A Belgian, Vandevelde also has experience in the food manufacturing sector.
Meanwhile, Prada Group has been increasingly vocal about its intentions to dispose of money-losing businesses and focus on its core brands of Prada and Miu Miu — with a move to Paris Fashion Week for Miu Miu the latest buzz-inducing initiative. Last fall, Prada chairman Patrizio Bertelli formed a new company, Prada SpA Group, that includes Azzedine Alaïa and Car Shoe but excludes Sander, Helmut Lang and its minority interest in Church's.
In a document issued to bankers last summer, Prada said it isolated Sander and Lang as "nonstrategic brands from the core group with a view to their subsequent disposal."
The group has been busy restructuring Sander to get it to break even on an operating EBITDA level in fiscal 2006 — and thus become more attractive to potential suitors. Key efforts have included whittling down expensive German manufacturing, building Sander's accessories business and introducing new fragrances, a home collection and a relaunched eyewear collection. The most recent financial results indicate Jil Sander Group narrowed its net losses to 9.7 million euros, or $12.3 million, in the first half of its fiscal year on sales that rose 3.1 percent to 69.8 million euros, or $88.6 million.
Still, the house has been rocked by turmoil in the design department practically ever since Prada first acquired its 75 percent stake in Sander in August 1999 for an estimated $105.6 million at the height of the industry's acquisition spree.
Sander resigned only five months into the partnership, prompting Bertelli to downplay the importance of a single creative force behind the label. "A brand that's as strong as Jil Sander doesn't need to rely on the name of a designer. It's not the name that counts, but the quality of the product," Bertelli told WWD at the time.
However, he capitulated and soon after appointed a creative director, Milan Vukmirovic, who had made his name at the trendsetting Paris boutique Colette, where he was art director and buyer. But Vukmirovic's fashion-driven, sometimes hard-edged aesthetic — which brought rock T-shirts and dresses laden with zippers to the usually quiet Sander runway — met with lukewarm reviews and disappointing sales.
Ultimately, Bertelli made up with Sander and she returned in May 2003 in one of the biggest fashion reconciliations in memory, a godsend to the designer's devoted followers in the retail and magazine worlds. Yet a little more than a year later, Sander split for the second time — seemingly the result of insurmountable clashes between her and Bertelli. The company characterized it as a nonrenewal of her contract, owing to "differing opinion on the future financial strategic plans and operational management."
Sander's team took over the design reins until the appointment last May of Simons, a Belgian who had won wide acclaim for his modernist men's wear. "I am eager to carry forward the simple and pristine design," he said at the time of his Sander appointment. "There is a strong affinity between how I perceive my own design and the core values that the Jil Sander brand embraces."
His debut men's and women's collections for the brand elicited praise from critics and retailers, who welcomed a return to Sander's original monastic serenity. Others cautioned against too literal a return to that aesthetic and questioned whether the original Sander customer has moved on to other labels for their dose of austerity.
Hired Raf Simons, told the media to hype him up so he can make Jil Sander label look attractive and then dumped it.
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