LA-Based Gores Group Buys Majority of Mexx from Liz Claiborne
After shopping around its struggling retail chain Mexx, Liz Claiborne Inc. found a buyer in Los Angeles private equity firm The Gores Group. The Gores Group, headed by Alec Gores, will acquire an 81.25 percent interest in the stores for $25 million in cash while taking over $60 million in debt. Liz Claiborne will keep an 18.75 percent interest in the emporium, which will be run by a joint venture between Gores and Liz Claiborne.
Liz Claiborne acquired Mexx in May 2001 for $264 million.“We’ve brought the Mexx European business to the early stages of a true turnaround. But there is more to be done, and in uncertain times and true market volatility, de-risking became essential,” said William L. McComb, Liz Claiborne’s chief executive, in a statement. “This transaction balances risk mitigation, debt reduction, and ongoing upside realization in just the right mix for our shareholders.”
The global Mexx business will continue to be led by Thomas Grote, the chain’s chief executive while Lloyd Perlmutter will stay on as chief executive of Mexx Canada.
The sale will strengthen Liz Claiborne’s financial position and enable the company to consolidate its losses from Mexx. For several years now, Liz Claiborne has not made a profit. In fiscal 2011, it had losses of $251.5 million on revenues of $2.5 billion.
A few years ago, to get back into the black, the apparel company started shedding labels that were dragging the company down. The labels included C&C California, Laundry by Shelli Segal, and Enyce. It has retained its more profitable brands such as Juicy Couture, Lucky Brand Jeans and Kate Spade. The Liz Claiborne label, which used to be a high-end brand selling at department stores, is now sold exclusively at JCPenney Inc.The Liz Claiborne New York brand designed by Isaac Mizrahi is sold on the TV shopping network QVC.The Gores Group, known for turning around distressed properties and then reselling them for a profit, has been on a major apparel and fashion buying spree. Last year it made a major investment in New York luxury label J. Mendel. This year, it bought a majority share of Los Angeles juniorswear company Big Strike Inc., launched by Lars Viklund, Kevin Talbot and later joined by Jodi Sundberg.In June, The Gores Group bought all the assets of Scovill Fasteners, which had been in bankruptcy.—Deborah Belgum
