Tailored Brands to Sell Joseph Abboud for $115M
Tailored Brands said last week that it would sell its Joseph Abboud trademarks to WHP for $115 million, but will retain exclusive rights to sell and rent Joseph Abboud-branded apparel and related merchandise in the U.S. and Canada.
Tailored Brands, an omnichannel specialty retailer of menswear also owns the Men's Wearhouse, Jos. A. Bank, Moores Clothing for Men, and K&G brands. WHP Global is a brand acquisition and management firm. Following the close of the transaction, WHP will have over $1.4 billion in retail sales across its portfolio of brands, including Anne Klein and Joseph Abboud.
“This transaction allows us to unlock value in the Joseph Abboud trademarks through an experienced partner that will focus on building the brand through international and category expansion," said Tailored Brands President and CEO Dinesh Lathi. "We plan to use the proceeds from the transaction for debt repayment, which will strengthen our balance sheet and provide additional financial flexibility to invest in our customer-facing transformation strategies.”
The designer Joseph Abboud will leave Tailored Brands at the end of January to pursue new opportunities in the global fashion community. The agreement is expected to close by the end of March, subject to satisfaction of certain closing conditions.
Total Retail's Take: Like many omnichannel retailers today, Tailored Brands had to do something to ease its debt burden. After all, in its most recent third-quarter earnings report, net earnings dropped 20 percent to $27.8 million from $34.8 million a year earlier. Also, Tailored Brands' decision isn't its first attempt to soften its debt load. Last year, the company sold a wholesale unit that included operations in the United Kingdom and the U.S. for $62 million. At the time, the company said it would use cash proceeds from the transaction to reinvest in its business and free up funds previously slated for capital expenditures for debt reduction.