Dive Brief:

• Fashion boutique South Moon Under is being acquired by Ames Watson, a private investment firm that acquired hat specialist Lids from Genesco in 2019.
• Terms of the deal were not disclosed. Annapolis, Maryland-based SMU currently has 30 stores spanning from Connecticut to Florida. 
• In a press release, Ames Watson indicated it plans to expand the retailer. "We see a tremendous opportunity to grow a brand with high recognition into a national store with a local approach," Lawrence Berger, co-founder and partner with Ames Watson, said in the release. 

Dive Insight:

Ames Watson launched in 2018 and in short order has made four retail acquisitions in the three years since. 

In late 2018 the firm agreed to acquire Lids from Genesco for roughly $100 million, financed in part by a $140 million credit facility. Ames Watson already owned the specialty sports apparel retailer Fanzz at that point and expanded its holdings with Lids, while Genesco was able to offload a sizable retailer that had become a distraction from its core business.

Some analysts at the time speculated that Genesco could have a hard time selling the banner given its size and struggles. And indeed, the price it fetched from Ames Watson fell short of prior estimates. Yet, post-acquisition, Lids has grown. Around the time of acquisition, Lids listed about 1,160 stores. As of an April press release, it had more than 1,200. Ames Watson says it has "successfully turned around and has grown" Lids and aims to do the same with South Moon Under. 

Founded more than 50 years ago, first as a surf shop in Ocean City, Maryland, South Moon Under focuses on curated and private-label fashion apparel, swimwear, accessories and housewares. Ames Watson's Lawrence said that the firm saw "a lot of untapped potential for expansion here while keeping the brand’s key values."

Following the acquisition, Ames Watson will operate the company's brick-and-mortar and e-commerce stores. The firm said it plans to "differentiate the product offerings between brick-and-mortar and online, including in-store exclusives," as it said it has with Lids.

Lawrence and fellow Ames Watson co-founder Thomas Ripley are both private investment veterans. Structured as a holding company, the firm focuses on long-term investments and close operating partnerships with acquired companies in transition or at "inflection points."