Guess?, Inc. (NYSE: GES) and global brand management firm WHP
Global today announced a definitive agreement to acquire New
York-based fashion brand rag & bone. Under the terms of the
agreement, Guess? will acquire all the rag & bone operating
assets, with Guess? and WHP Global to jointly own rag & bone’s
intellectual property.
Since its origins in New York in 2002, rag & bone has
established itself as a leader in the American fashion scene. Known
for its authentic style, blending traditional craftmanship with
modern cultural references, the brand has become synonymous over
the years with effortless quality clothing for both men and women,
with an innovative yet understated New York aesthetic and a strong
expertise in denim.
Currently, the brand directly operates 34 stores in the U.S. and
two stores in the U.K., and is also available in high-end
boutiques, department stores and through e-commerce globally. In
2023, rag & bone generated unaudited annual revenue of
approximately $250 million and adjusted EBITDA of $18 million.
Carlos Alberini, Guess? Chief Executive Officer, said:
“We are excited to add an iconic brand such as rag & bone to
Guess?, further diversifying our portfolio with complementary
customer bases and price points. We look forward to partnering with
WHP Global to build on rag & bone’s heritage. Guess? has an
incredible platform with a strong global distribution network and
outstanding licensee partners that will enable us to power the
growth and expansion of the rag & bone business. We expect the
transaction to deliver earnings per share accretion in the first
year and strong value creation for our shareholders for years to
come.”
Paul Marciano, Guess? Co-Founder and Chief Creative
Officer, said: “rag & bone is a brand I have always loved
and respected. It is a brand well known for its pre-eminence in
American fashion that over the years has stayed true to its roots
and founding values, with an unwavering commitment to quality and
authenticity. This acquisition is the first one in the 43-year
history of Guess?, and I am thrilled to welcome rag & bone to
our family. I look forward to working with Andrew Rosen and the
talented team at rag & bone to pursue the brand’s product and
market expansion internationally.”
Yehuda Shmidman, WHP Global Chairman and Chief Executive
Officer, said: “The acquisition of rag & bone aligns us
with powerful partners and grows WHP Global's portfolio to over
$7.5 billion in retail sales across 11 brands. We have great
respect for rag & bone’s business and brand positioning, and
look forward to building on its success as we capture the
compelling opportunities ahead.”
Andrew Rosen, Chairman of the Board at rag & bone,
said: “I am thrilled about this new relationship with Guess? and
WHP Global. Today marks the beginning of an exciting new chapter as
rag & bone joins forces with a much larger international
fashion company. It’s a great opportunity for our team to take the
brand to the next level, blending our unique styles and respective
expertise to create new possibilities for rag & bone on a
global scale.”
rag & bone will continue to be based in New York City. As
part of the Guess? portfolio, the rag & bone team will operate
as an independent fashion brand with a focus on continuing to
provide unique and timeless collections to its customers.
Highlights of the transaction:
- Creates Strong Partnership with WHP Global, One of the
Leading Global Brand Management Companies Today. This
transaction will enable rag & bone to maximize global expansion
by benefiting from both Guess?’ and WHP Global’s platforms and
distribution and licensee partners all over the world.
- Leverages Guess?’ Powerful Infrastructure to Accelerate rag
& bone Growth and Drive Synergies. Over the years, Guess?
has developed a strong global infrastructure and network of
licensees and wholesale partners. Through this transaction, rag
& bone will benefit from Guess?’ ability to support the growth
of its product offerings, expand the brand’s reach into new markets
and drive operational efficiencies.
- Expands Guess?’ Global Lifestyle Brand Portfolio with a
Commitment to Timeless and Innovative Designs Customers Love.
The acquisition of rag & bone underscores Guess?’ long-term
growth strategy to power a bigger business, while maintaining a
focus on delivering the best products for customers. This
transaction brings together highly complementary price points and
customer bases along with creative teams that are dedicated to
upholding a reputation for innovative design and uncompromising
quality.
- Positions Guess? to Drive Increased Value for
Shareholders. This transaction is consistent with the Company’s
commitment to generate strong value for its shareholders through an
efficient and opportunistic approach to capital allocation. The
potential in terms of revenue growth and operational efficiencies
for rag & bone is expected to make the transaction accretive to
earnings per share for Guess? in the first year.
Transaction Details
Guess? and WHP Global have entered into a definitive agreement
to acquire rag & bone, under which Guess? will contribute $56.5
million. Additionally, there is the potential for an incremental
earnout consideration of which Guess? will be responsible for a
maximum of $12.8 million, based on preset levels of sales and
EBITDA performance over the course of rag & bone's 2024 fiscal
year.
Under the terms of the agreement, Guess? will acquire and own
all the brand's operating assets and assume the related operating
liabilities of the rag & bone business. In addition, a joint
venture owned 50% by Guess? and 50% by WHP Global will acquire rag
& bone’s intellectual property. Guess? and the joint venture
will enter into a license agreement granting Guess? the exclusive
right to use rag & bone IP to manufacture licensed products
worldwide and to sell licensed products in specified territories in
exchange for Guess?’ payment of a royalty fee.
The acquisition is subject to customary closing conditions,
including regulatory approval, and is expected to close during the
first quarter of Guess?’ 2025 fiscal year.
Advisors
The Sage Group, LLC is serving as financial advisor and
O'Melveny & Myers LLP is serving as legal advisor to Guess?,
Inc. Kirkland & Ellis LLP is serving as legal advisor to WHP
Global. Solomon Partners, L.P. is serving as financial advisor and
Golenbock Eiseman Assor Bell & Peskoe LLP and Katten Muchin
Rosenman LLP are serving as legal advisors to rag & bone.
Notice Regarding Forward-Looking Statements
Except for historical information contained herein, certain
matters discussed in this press release, including statements
concerning the pending acquisition of rag & bone, the expected
timing of the closing of the acquisition and anticipated benefits
and other expectations following the closing of the acquisition,
are forward-looking statements that are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act
of 1995. All statements other than statements of historical fact
are forward-looking statements. Forward-looking statements, which
are frequently indicated by terms such as “expect,” “could,”
“will,” “should,” “goal,” “strategy,” “believe,” “estimate,”
“continue,” “outlook,” “plan,” “create,” “see,” and similar terms,
are only expectations, and involve known and unknown risks and
uncertainties, which may cause actual results in future periods to
differ materially from what is currently anticipated.
Factors which may cause actual results in future periods to
differ materially from current expectations include the risk that a
condition to closing of the acquisition may not be satisfied (or
waived), including required regulatory approval, and that the
closing of the acquisition might be delayed or not occur at all;
uncertainties regarding the ability of Guess? to realize
operational efficiencies and other anticipated synergies and
benefits from the acquisition in the timeframe expected or at all;
economic and other events that could negatively impact consumer
confidence and discretionary consumer spending; changes in the
competitive marketplace and in our commercial relationships; our
ability to anticipate and adapt to changing consumer preferences
and trends; our ability to manage our inventory commensurate with
customer demand; the high concentration of our Americas Wholesale
business; risks related to the costs and timely delivery of
merchandise to our distribution facilities, stores and wholesale
customers; unexpected or unseasonable weather conditions; our
ability to effectively operate our various retail concepts,
including securing, renewing, modifying or terminating leases for
store locations; our ability to successfully and/or timely
implement our growth strategies and other strategic initiatives;
our ability to successfully enhance our global omni-channel
capabilities; and other risks and uncertainties associated with
Guess?’ businesses set forth in the section entitled “Risk Factors”
in the Guess?’ Securities and Exchange Commission (the “SEC”)
filings, including, but not limited to, its most recent Annual
Report on Form 10-K and its most recent Quarterly Reports on Form
10-Q, copies of which are on file with the SEC and available on the
SEC’s website at www.sec.gov. The statements in this press release
are made as of the date of this press release. Guess? undertakes no
obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise,
except as required by law.
About GUESS?, Inc.
Guess?, Inc. designs, markets, distributes and licenses a
lifestyle collection of contemporary apparel, denim, handbags,
watches, eyewear, footwear and other related consumer products.
Guess? products are distributed through branded Guess? stores as
well as better department and specialty stores around the world. As
of October 28, 2023, the Company directly operated 1,015 retail
stores in Europe, the Americas and Asia. The Company’s partners and
distributors operated 544 additional retail stores worldwide. As of
October 28, 2023, the Company and its partners and distributors
operated in approximately 100 countries worldwide. For more
information about the Company, please visit www.guess.com.
About WHP Global
WHP Global is a leading New York based firm that acquires global
consumer brands and invests in high-growth distribution channels
including digital commerce platforms and global expansion. WHP owns
a portfolio of consumer brands that collectively generate over USD
$7 billion in global retail sales. The company also owns WHP+, a
turnkey direct to consumer digital e-commerce platform, and WHP
SOLUTIONS, a sourcing agency based in Asia. For more information,
please visit www.whp-global.com.
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version on businesswire.com: https://www.businesswire.com/news/home/20240215877428/en/
Guess?, Inc. Investor Relations
Fabrice Benarouche Senior Vice President Finance, Investor
Relations and Chief Accounting Officer (213) 765-5578
ir@guess.com
WHP Global Jaime Cassavechia
jaime@ejmediagroup.com
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