“We got tremendous value from the deal,” said the president of New York-based Marquee Brands on the £40.8m acquisition of Ben Sherman from US group Oxford Industries, which was confirmed on Monday.
Although the British heritage menswear brand made a loss of £7.3m on sales of £49m in the year to January 31, Michael DeVirgilio told Drapers the Marquee team sees the business as “a very high growth opportunity”. Oxford Industries paid £80m for the business in 2004.
DeVirgilio, who was president of licensing and international of US brand Kenneth Cole before he left to set up Marquee Brands in October last year, said: “Ben Sherman is currently trading at about 50% of its historic high point (from about 2004) so we knew it had bandwidth to grow.
“It is only trading in the UK, the US, Australia and a little bit of Canada today so we saw global potential, with a particular focus on Asia Pacific and Latin America.
“We also saw a lot of category expansion,” he added, pointing to initial growth opportunities in accessories, as well as womenswear at a later date.
In the short term, there will be no big departure from the current retail, wholesale and online strategy in its domestic markets of the UK and Ireland, although the team will aim to refocus on the essence of the brand, which DeVirgilio sees as “youth culture and music-inspired fashion for the everyman”.
The head office will remain in the UK and Marquee Brands is firmly behind the existing strategy, he explained.
“What we don’t want to do in the near term is disrupt what is happening at the moment. We’ll be taking small steps. The worst thing you could do is to make these very sharp changes that in the end don’t pay off or they look like a quick fix. There never is a quick fix so we are going to be very thoughtful and methodical.”
The US presents the biggest opportunity for growth, currently accounting for less than 20% of the business but with a target to grow five-fold.
“If you think about the scale of the US industry, most people don’t go into that market unless they are planning to do a couple of hundred million dollars – now those are big aspirations and I don’t think we can get there that quickly but the potential in the US is huge,” he said. “Ben Sherman is a very well-known business in the US too.”
Marquee Brands is backed by private equity firm Neuberger Berman and made its first acquisition of Italian luxury footwear brand Bruno Magli in February for $35m (£22.5m).
DeVirgilo said Marquee was able to close the deal with Oxford because it could move quickly and pay in full promptly. Marquee’s European advisor is London-based industry veteran Marshall Lester, who spent 25 years living in the US and now specialises in transatlantic deal-making.
Marquee’s chief operating officer is Cory Baker, who previously worked for US-based Infinity Lifestyle Brands and Iconix Brand Group.
According to DeVirgilio, over a five-to-six-year period the team is aiming to acquire 12 to 15 businesses across the fashion and retail, food and beverage, health and beauty, entertainment, sports and wellness industries. Luxury, mid-market and mass market tiers will be developed.
“Being driven by an investment strategy we have to diversify to ensure that there is balanced risk but also improve the opportunity for growth as when a certain market grows, another ebbs so there is a broad range of investments that we are looking at,” revealed DeVirgilio.
“If you look at our first two acquisitions, we have a little concentration on the men’s ready-to-wear and accessories side of the industry in terms of fashion and retail. We are now clearly in the market for women’s brands and women’s accessories brands. Within that I’d include sports and athleisure, so those are the pieces that we are now looking for.
“We have a few interesting prospects in our pipeline already – a couple of which are in the UK.”