Brand licensing company Global Icons on Wednesday announced the acquisition of Fred Segal for an undisclosed amount, according to a company press release.
Global Icons will have majority ownership. Evolution Media, an equity investment firm that partnered in 2014 with previous Fred Segal owner Sandow, will maintain a minority stake.
The Los Angeles-based apparel retailer also announced the April 6 opening of a 4,000-square-foot location in Malibu, its third location in Los Angeles.
Fred Segal's groovy blue and red font evokes its origins in 1960s California, and the brand continues to represent cool L.A. vibes even if it's lost some of the popularity it enjoyed in the late 20th century.
"The brand has a strong, highly engaged following, but it's a very niche, luxury-type of following amongst its base," Ray Hartjen, marketing director of RetailNext, told Retail Dive in an email. "While many may have heard the brand being name dropped on a TV show, and others yet might aspire to be future Fred Segal customers, the price points are too high for mass appeal."
But its new owner believes there's plenty of brand equity to support an international expansion, and in a statement on Wednesday, Fred Segal President John Frierson said that the investment will "supercharge our growth" into new categories and take advantage of "worldwide demand" for the brand.
In 2017, the company opened a flagship on Sunset Boulevard in West Hollywood, and opened stores in Taipei, Taiwan; Kuala Lumpur, Malaysia; Zurich; Basel, Switzerland; Lausanne, Switzerland; and Bern, Switzerland. and "achieved record sales at the LAX International Terminal store," according to the release. The brand also plans to expand beyond apparel and accessories into categories like home.
"Fred Segal has been committed to a brick-and-mortar expansion in global markets as a way to introduce its brand to shoppers and develop more brand identity, awareness and recall," Hartjen noted. "This acquisition should provide the capital to more aggressively expand internationally, in well-trafficked, highly supported locations. At the end of the day, that's a good thing."
That may be ignoring some limitations of the brand, however, according to Bob Phibbs, CEO of the consulting firm The Retail Doctor. In its ambitions to export the West Hollywood lifestyle, it follows ill-fated attempts by surf brands like Quicksilver that couldn't make it happen, and its brand may not have the strength to compete in today's market, he said.
"They had celebrities, that celebrity lifestyle, certainly up-and-coming celebrities, but I don't know that the brand has the cachet it had in the 80s," Phibbs told Retail Dive in an interview. "And with all these marketplaces out there and Farfetch and mircro-brands — It's not a vintage brand for the boomers and the millennials are more likely to find brands on Instagram."
Hartjen says that Fred Segal may have to adjust, which carries its own risks. "Long-term, it will be important for the Fred Segal brand to be able to change and evolve as pop culture inevitably changes," he said. "To be relevant, the creative behind the brand will need to be fresh and agile. So, while the financial resources to seed global expansion is a big plus, the biggest worry might be the effects of the acquisition on the autonomy of the brand with respect to creative and design. In this retailing segment, with its price points, it's all about having products that resonate with shoppers, and product misses can have tremendous negative impacts."