Centric Brands is changing again.
The company — a powerhouse apparel producer, licensee and sometime acquirer — closed a deal to exit bankruptcy on Friday as a private company with big-time private equity backers, a debt load that’s $700 million lighter and a kind of plucky optimism.
“In the last few months, as many companies have gotten weaker, we’ve just gotten much stronger,” said Jason Rabin, who is continuing as chief executive officer and in an interview described the bankruptcy process as “educational.”
“It was a great company before the pandemic and it will be a better company after,” he said. “Being private, we can really put together a strategy and focus on a long-term strategy and not worry about short-term repercussions and how things are looked at. We can stay our course. Being public, you’re always under the scrutiny of the market.”
Now the company has just a few key stakeholders to keep happy.
Centric is coming out of bankruptcy backed by partners who were involved with the company before the filing, including Blackstone, Ares Management and HPS Investment Partners.
Blackstone is the majority sponsor and, with $528 billion in assets under management, brings a lot of weight to the business, opening up possibilities for the future. “Blackstone Group provides us with a lot of resources, a lot of strategic insight,” Rabin said.
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Randy Kessler, senior managing director of Blackstone, said: “We are pleased to back Centric Brands as it begins its next chapter. The company continues to be an industry leader and licensee of choice for some of the world’s most iconic brands, and is in a strong financial position. We are confident in Jason and the management team and believe the company’s future is bright.”
From the Centric portfolio.
The company’s trip through bankruptcy was just the latest twist in Centric’s active evolution.
Founded in 1987 as Innovo Inc., the company took on the name of Joe’s Jeans Inc. after merging with the denim maker in 2007, only to later merge with Hudson, sell Joe’s, take on Robert Graham and become Differential Brands. That name lasted until 2018, when the company renamed again following the $1.2 billion cash acquisition of Global Brands Group’s North American licensing business.
The Global Brands deal was transformative, but also contributed heavily to the $1.7 billion in funded debt Centric carried going into the pandemic, sending the company to bankruptcy court.
Centric emerges from the Chapter 11 process with a still-large portfolio, making goods for more than 100 brands under licenses that include kids apparel for Tommy Hilfiger; men’s and women’s fashion for Joe’s Jeans and Buffalo and accessories for Kate Spade, Michael Kors and All Saints. The company also owns Hudson, Robert Graham, Zac Posen and more.
The company could still do a little bit of dealmaking and buy a brand if the fit is right, but Rabin said he is also content to help the intellectual property experts like Authentic Brands Group or Marquee get the most out of the brands they buy.
“I have a really powerful team behind me that want to see this company grow to the next level,” Rabin said. “The market’s interesting now and everyday we hear about a new brand that’s out there. If a brand is going to hit one of our core pillars, we’re going to get excited about it.
“Things are changing rapidly…but I do want to stay disciplined,” he said.
The company’s broader strategy hasn’t changed.
Rabin said Centric would continue to build out its three main lines of business — kids, accessories and men’s and women’s lifestyle brands. (The company is also strong in entertainment with products across all three categories that feature licensed characters).
He said the company has largely been able to operate seamlessly through the court process and is now picking back up. The coronavirus, however, did take its toll this year, with Centric laying off 660 workers in the spring.
“We took the appropriate measures to try to look at the areas that we felt needed to become minimized,” Rabin said.
Centric has been helped this year by its broad portfolio that extends from higher-end stores like Saks Fifth Avenue, Nordstrom and Bloomingdale’s and extends to mass market retailers such as Walmart and Target, which were able to keep their doors open throughout the worst of the coronavirus shutdown.
The ceo said his retail clients helped the company work through the tough times and that the Centric’s workforce has rallied too.
“We’ve really just buckled down and learned a lot,” Rabin said. “At the end of the day, the ending will be a brand new beginning.”
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