After selling Juicy Couture in 2010, founders Pamela Skaist-Levy and Gela Nash-Taylor have been reaching out to private equity firms in search of an investor to help them buy back their brand. Experts believe that the return of the founders may be just what the brand needs to regain its importance and strength. In light of this, and other instances where founders have sought to re-acquire their former brands, founders may wish to consider at the time of sale what options might be appropriate should they ever wish to re-acquire.
Skaist-Levy and Nash-Taylor started Juicy Couture in 1997 with just $200 and transformed it into an international brand, selling it to Liz Claiborne Inc. (now Fifth & Pacific) for over $230 million. In 2010, they left the brand over an alleged conflict with Fifth & Pacific CEO William L. McComb and shifted their focus to their higher end label, Skaist-Taylor.
Juicy’s current owner Fifth & Pacific is eliminating Juicy and Lucky Brand in order to focus more heavily on Kate Spade. While Juicy Couture has seen extraordinary growth in the number of stores and outlets, currently 75 specialty stores and 53 outlets, the brand is seeking to reinvent itself after becoming heavily associated with its phenomenally popular terry cloth and velour tracksuits. Profits have also reportedly declined recently.
Analysts believe that a reinstatement of the founders could revitalize the brand. “It could be a redemption story,” Corinna Freedman, an analyst at Wedbush Securities, who covers Fifth & Pacific, speculated . Mary Epner of Mary Epner Retail Analysis agreed: “Juicy is still a great brand in spite of everything…It still has a loyal customer base.” Other agree: John Henderson, director at acquisitions firm Net Worth Solutions, believes that Skaist-Levy and Nash-Taylor “could probably reenergize [Juicy] and make it important again…they were very creative.”
Many other designers have left their labels to later seek them back again. Jill Sander left her company for the first time in 2000 over the quality of production, and quit again in 2004 over the direction that Patrizio Bertelli wanted to take the brand. Similarly, Roland Mouret split with investors and was left to design under the name RM by Roland Mouret until he re-acquired his name in 2010.
In light of this trend, at the time of selling their brands, founders may wish to consider whether there might be circumstances in which they may wish to reacquire their brand. And if so, there may be contractual structures that may be appropriate. By way of example, the contract may require the buyer to first offer the brand back to the founders should the buyer wish to sell the brand in the future. Of course, options like this may have associated costs — for, e.g., a lower price for the initial sale of the brand — but, nonetheless the option may be useful if founders contemplate buying back their brand. Indeed, if the founders wish to do so, they may be able to get relatively favorable financing terms as their familiarity with running the business of the brand may add value and credibility in the eyes of their private equity or financing partner.