Tuesday, March 30, 2010

Swatch and Bulgari Squash Takeover Rumors

Swatch Group and Bulgari SpA have moved quickly to deny rumors of the Swiss company's interest in taking over the Italian jeweler.

In a statement to Reuters onMonday, Nick Hayek, Swatch Group CEO, said, "The Swatch Group has not expressed any desire to acquire Bulgari, and Bulgari has not expressed either the desire to be bought by Swatch Group. There are no negotiations in front of, or behind the curtains".

Bulgari issued a separate statement saying that they enjoyed good "business relationships" with Swatch, but that "the two Companies have never discussed any kind of transactions on shares. The Bulgari family is not interested in selling".

Speculation of a takeover first arose after comments Mr. Hayek made to German magazine, Focus, which suggested that Swatch was interested in purchasing Bulgari.

According to Reuters, Mr. Hayek said, "I do not deny that there are interesting big brands that have potential to develop" and gave Bulgari as an example. However, he insisted that Swatch was not the type of company to engage in hostile takeover battles.

Bulgari shares rose more than 5 percent after Mr. Hayek's comments were published.

(Photo: Courtesy of WWD)

Thursday, March 25, 2010

HR Quarterly Round-Up: Tiffany & Co., PVH, Hermes

Audrey Hepburn in Breakfast At Tiffany's

Tiffany Profits Quadruple As Sales Sparkle (Times Online): Tiffany & Co, the New York-based luxury jewellery retailer, said that its fourth-quarter profits more than quadrupled, as high-end shoppers were lured back into its stores over the Christmas period.

Phillips-Van Heusen Returns to 4Q Profit (Business Week): Phillips-Van Heusen Corp. returned to a fourth-quarter profit, the clothing company said Monday, as its revenue climbed more than 6 percent thanks to stronger sales of its Calvin Klein brand.

Hermès lifts operating Profit in Spite of Downturn (Reuters): French luxury group Hermes (HRMS.PA) stopped short of giving an updated forecast for 2010 on Thursday after posting a rise in operating profit for 2009 in spite of the industry's worst downturn in two decades.

Monday, March 15, 2010

SOLD! Tommy Hilfiger Goes to PVH for $3B!

Looks like the rumors were true:

Phillips-Van Heusen to Buy Tommy Hilfiger
March 15, 2010
Phillips-Van Heusen, the clothing conglomerate that owns Calvin Klein, agreed on Monday to buy Tommy Hilfiger, once a leading purveyor of colorful preppy clothing, for about 2.2 billion euros ($3 billion), in cash and stock.

Phillips-Van Heusen, which also owns Arrow and Izod and licenses brands like Geoffrey Beene and Kenneth Cole New York, is hoping to take advantage of Tommy Hilfiger’s strong European distribution channels for its own products. Despite Tommy Hilfiger’s reputation as a quintessentially American clothier, two-thirds of the company’s business is based in Europe.

“Tommy Hilfiger fits all of our acquisition criteria: a strong brand, superior management, highly profitable, immediately accretive to earnings, and focused on international growth,” Emanuel Chirico, Phillips-Van Heusen’s chairman and chief executive, said in a statement.

Under the terms of the deal, Phillips-Van Heusen will pay 1.9 billion euros in cash and 276 million euros in stock, as well as assume 100 million euros of liabilities.

The bulk of the purchase price will be borrowed money. Phillips-Van Heusen intends to finance the cash portion of the deal and refinance $300 million worth of bonds with a combination of $385 million of cash on hand, $2.45 billion of bank loans (including an undrawn $450 million revolver) and $600 million of senior unsecured bonds.

The company will also issue $200 million of perpetual convertible preferred notes issued to LNK Partners and MSD Capital that convert at $47.74 a share with no coupon or liquidation preference. If fully exercised, the securities will convert into about 6 percent of Phillips-Van Heusen’s outstanding shares.

Phillips-Van Heusen also intends to issue $200 million of new shares before the deal closes.

The deal is subject to Phillips-Van Heusen’s obtaining the necessary financing. In case that does not happen, it will pay Apax Partners, the British private equity firm, a 69 million euro break-up fee.

While Mr. Hilfiger no longer holds a management role at the company that bears his name, he will remain a principal designer and a public face for the clothier under Phillips-Van Heusen.
Read more here.

This is a good deal for both parties: The acquisition of Tommy Hilfiger makes PVH the largest clothing company in the world, amassing $4.6B in global sales, and increases the company's international presence, particularly in Europe (where more than half of Hilfiger's business is based) and Asia (where Hilfiger enjoys strong distribution). On the flip side, this is perfect timing for Hilfiger which is in the midst of a comeback thanks to an overhaul of the brand. The company stands to experience growth, on par with Calvin Klein when it was acquired by PVH in 2003. Since then, CK has grown 12%-14% per year and boasted a 6% upswing in their fiscal 2009 performance.

Thursday, March 11, 2010

Madonna Inks Deal With Iconix; Reveals

After much speculation, Madonna has official announced her joint venture with Iconx Brand Group Inc, called MG Icon LLC, and revealed details of her exclusive juniors' collection with Macy's:

MG Icon will be 50 percent owned by Iconix and 50 percent by Madonna and Guy Oseary, her longtime manager and the “G” in the joint venture’s name. MG Icon will develop a range of fashion-related business projects, including the creation of new brands, the acquisition of existing labels and the exploration of opportunities within the portfolio of 21 brands that Iconix and its other joint ventures already own, said Neil Cole, chairman and chief executive officer of Iconix.


Under terms of the joint venture, MG Icon will hold the right to use Madonna’s name and associated personality for apparel, footwear, accessories and other products. Madonna will also provide creative input and endorsement services in connection with the development and marketing of the venture’s brands and projects.


The Material Girl line at Macy’s will launch in 200 doors and on macys.com in time for back-to-school, with the aim of expanding to almost all of the department store’s 850 doors, said Jeff Gennette, chief merchandising officer at Macy’s Inc.


The collection initially includes apparel, footwear, handbags and jewelry, with retail prices ranging from $12 to $40. Offerings could expand into beauty and fragrance categories next year.

Material Girl is targeted at 13- to 25-year-olds, and Lourdes Leon, Madonna’s 13-year old daughter, is serving as the muse for the line and has been involved in design meetings for the collection. “Lourdes has an incredible sense of style and her point of view on fashion has definitely been an inspiration for the line,” said Gennette. (SOURCE: WWD.com)
Both Macy's and Madonna are about twenty-five years too late. The 13-25 yr-old demographic is not looking to Madonna for fashion inspiration.