California Apparel News

Joining the wave of California clothing companies that are opening more stores in Europe, BCBG Max Azria Group Inc. agreed to acquire publicly traded Alain Manoukian SA in France for more than $69.6 million. BCBG also said it plans to purchase a retailer in Spain before the end of July and increase the number of its shops in the Iberian peninsula to more than 30.

The deals mark privately held BCBG’s aggressive push to grow its stable of brands and increase its share of the global fashion market. BCBG’s retail presence is strongest in North America and Asia. In addition to flagship ready-to-wear label BCBG Max Azria, it also owns Parisian couture house Herveacute; Leacute;ger and contemporary label Parallel, among others.

Vernon, Calif.–based BCBG declined to disclose details on the Spanish transaction. David Jehan, the president of BCBG’s international division, would only say that the acquisition in Spain will increase the company’s number of stores there to 30 to 54 and that an announcement will come “very soon.”

The acquisition of Alain Manoukian brings BCBG not only approximately 300 stores in Europe but also headquarters and a large distribution center in Valence, France, located about 287 miles west of Milan, Italy. “We decided to buy the company first of all for logistics,” Jehan said in a telephone call from Paris, noting that Alain Manoukian’s distribution center is in the center of Europe.Jehan said BCBG plans to convert 15 to 20 Alain Manoukian–branded stores to BCBG Max Azria boutiques. He said the company also plans to split 15 to 25 of Alain Manoukian’s larger stores into two smaller shops. As of April 2005, BCBG had 174 stores, with seven in Europe, specifically in France, Portugal, Russia, Turkey and Greece. The purchase of Alain Manoukian, which is the largest acquisition so far for BCBG, will help double BCBG’s sales in 2006 to more than $1 billion.

BCBG’s move makes sense to Jeffrey van Sinderen, who tracks publicly traded apparel companies such as Bebe Stores Inc. at Los Angeles’ B. Riley & Co. “There is no reason that companies with a recognizable brand with a strong concept and with merchandise that people like can’t move into Europe or expand more into Europe than they already have,” he said.

Van Sinderen noted that Europe is an area of focus for Brisbane, Calif.–based Bebe. Action-sports companies such as Huntington Beach, Calif.–based Quiksilver Inc. and Costa Mesa, Calif.–based Volcom Inc. also have set their sights on Europe as an area of growth. The strong euro can help boost profits. Plus, given how different and fragmented the wholesale business is in Europe compared with the United States, it would be logical for an American company to open its own branded stores on the other side of the Atlantic, he said.

Under the terms of the deal, BCBG agreed to purchase about 1.9 million shares, or an 89.28 percent stake, in Alain Manoukian from the Manoukian family and a Danish investment group at a price of 31 euros a share. The remaining shares are held by the public, which will receive a buyout offer from BCBG. The acquisition is expected to be completed within 90 days.

Jehan said designer Alain Manoukian will stay with the company. He said BCBG will help design and improve the product at Alain Manoukian although it does not plan to introduce any new lines. He said BCBG has not formed a strategy yet for menswear.

Jehan said Alain Manoukian belongs in the better ready-to-wear category, with retail price points running from $40 to $275.In comparison, BCBG Max Azria is sold in the contemporary market, with prices ranging from $75 to $400. Alain Manoukian reduced its net loss to 2.8 million euros in 2004 from 10.7 million euros in 2003, as annual sales fell 8 percent to 134.3 million euros.

Some French enthused about the deal. Karine Amieacute;va, trade attacheacute; for consumer goods in the economic department of the French Embassy in Los Angeles, described the acquisition as “a wedding between two famous brands.” She said that while BCBG will obtain stores that are located in commercial centers, usually near shops for well-known labels such as Sonia Rykiel, Alain Manoukian will have the opportunity to grow in the United States.

—Khanh T.L. Tran