Target: Women’s Apparel Group
Sponsor: Monomoy Capital Partners
Seller: Redcats Group
Legal Counsel: Sponsor: Kirkland and Ellis
The women’s apparel company, known under Redcats USA as Missy Group, marks Monomoy Capital’s fifth corporate carve-out to date. The business operates the brands Chadwick’s, Metrostyle and Closeout Catalogue Outlet, and has around $300 million in annual revenue. Monomoy Capital said the deal represents one of its largest transactions to date.
A play in the shrinking catalogue sales industry may seem curious at this juncture, even for a turnaround investor like Monomoy Capital. The deal comes after
But Monomoy Capital believes it has a plan to reposition the business and foster growth at what has been a neglected corporate orphan in a withered category. The firm is looking to use the catalogues to help drive traffic to the Web sites of Women’s Apparel brands, said Dan Collin, a partner with Monomoy. The firm believes this strategy will lift the e-commerce component of the business, which already accounts for over half of company revenues. Margins for well-run catalogue businesses can be north of 5 percent, Collin told Buyouts.
Add-on acquisitions of clothing companies or complimentary categories may be another avenue for growth, Collin said.
The first order of business for Monomoy Capital will be to transition Women’s Apparel to a standalone company. The firm plans to “right-size” back office functions and IT services previously provided by Redcats’s corporate parent, France-based luxury goods company PPR. There have already been changes in management, with the installation of a new CEO and COO. Both hail from consulting firm SD Retail Consulting and plan to focus on enhancement of the company’s branding.
Monomoy Capital also expects to increase profitability through better sourcing and supply chain systems. The overseas manufacturers of Women’s Apparel had locked the company into rigid, early stage contracts, Collin said, leaving it little ability to adjust orders for changes in demand or clothing styles.
Monomoy Capital-backed companies in related fields include Barjan, a distributor of non-food items for truck stop retail centers, and Anchor Hocking, a glassware distributor. The Women’s Apparel Group investment is the firm’s tenth out of its first fund, a $280 million pool raised in 2007. The deal leaves that fund around 45 percent deployed. The New York-based firm got its start in 2005 when Collin, along with co-founders Stephen Michael Presser, Justin Hillenbrand and Philip Von Burg, left