Graff, Guez Sell Labels in Separate Deals
Graff CaliforniaWear, a 76-year-old privately held sportswear manufacturer based in downtown Los Angeles, is wrapping up the final terms of a licensing deal that will deliver its stable of labels over to its former Asian contractor, Hong Kong–based U.M. Co., for an undisclosed sum.
U.M. is in the process of establishing its U.S. headquarters in Los Angeles, where it will market Graff’s collection to the trade, beginning with the Summer ’05 line. The company has hired Graff’s upper management, design and sales teams. “The consumer shouldn’t notice a thing. It should be a seamless transition,” said a spokesperson who wished to remain anonymous.
Graff markets misses sportswear and coordinates under the Graff, GraffWear, Graff Jeans and GW labels. The company’s founder, Lee Graff, passed away last month, but the transition is unrelated to her death.
“There’s more opportunity to go direct now [for private-label opportunities],” said the Graff spokesperson. “There are opportunities for everyone involved.”
The remaining partners in Graff, Franco and Scott Morielli, are overseeing the leasing of the company’s facilities on 15th Street as well as the operations of four retail stores.U.M. is taking over a facility nearby on 16th Street that was formerly occupied by the Kelly Paper Co. U.M. will continue to use its Hong Kong factory to produce the Graff line.
In a separate move, Los Angeles–based apparel executive Hubert Guez, who owns a large percentage of denim giant Innovo Group Inc., is in the process of selling his separately owned Commerce Clothing Co. to New York–based private-label specialist Cygne Designs Inc. Guez resurrected the line of denim and private-label career and casual apparel in 2004 after it sat dormant for several years. The company posted $17.4 million in sales in the last half of 2004 and $13.4 million during the first quarter.
Under the plan, which has yet to be finalized, Guez will acquire 12 million shares of Cygne common stock and up to $50 million in a promissory note. The deal requires that Cygne contract with a designated manufacturer controlled by Guez to produce the line. Guez will also have the option to nominate three directors to Cygne’s board.
—Robert McAllister
