- PVH plans to sell major pieces of its Heritage Brands unit to Authentic Brands Group for $220 million, the company said in a press release Wednesday.
- The deal includes the Izod, Van Heusen, Arrow and Geoffrey Beene brand trademarks, and is expected to close in the third quarter. PVH plans to use proceeds from the sale to buy back its own stock.
- Under the terms of the deal, PVH — which also owns the Tommy Hilfiger and Calvin Klein brands — will continue to own and operate the intimates and underwear businesses, and will operate the dress shirts and neckwear business. Centric Brands and United Legwear & Apparel Company will also have licenses to operate parts of the Izod, Van Heusen and Arrow sportswear businesses.
PVH and Authentic Brands are case studies in their opposing approaches to being an apparel conglomerate.
PVH, like apparel conglomerate peers such as VF Corporation, is selling off brands to focus on its best performers. As an aggregator of brands, Authentic Brands is doing just the opposite. It has been on a years-long shopping spree, buying up trademarks in apparel and other sectors to create an empire of brand names.
As it tries to laser in on Tommy Hilfiger and Calvin Klein, PVH last year moved to close all 162 of its Heritage Brands outlet store fleet, comprising the Izod, Van Heusen and Warner's banners. The company also sold its Speedo North America business for $170 million in January last year.
The sale of Heritage Brands labels to Authentic Brands will shave a chunk off PVH's sales. The company knocked two percentage points off its revenue growth projections for the year. It now expects revenue to increase by 22% to 24%. Credit Suisse analyst Michael Binetti estimated the remaining Heritage business, which includes women's intimates labels Warner's, Olga and True&Co., is worth $600 million in annual revenues.
And while PVH dropped its revenue estimates with the sale of those Heritage brands, it effectively maintained its earnings per share guidance. Binetti noted that implied a "better core ... performance" out of Tommy Hilfiger and Calvin Klein.
Authentic Brands, meanwhile, is beefing up its fashion holdings with the purchase of widely known brand names, with Izod going back more than 80 years and Van Heusen more than a century.
"Each brand has strong consumer recognition, global distribution anchored at leading retailers and robust product programs with best-in-class licensing partners," Authentic Brands CEO and founder Jamie Salter said in a statement. "We believe there are significant opportunities to tap into the brands' rich histories and to further grow their presence around the world."
Izod, Van Heusen and Arrow have 60 licensing agreements among them, which Authentic Brands will take over, as well as the brands' marketing initiatives.
Authentic Brands has been busy over the past couple of years. Independently or through SPARC, a joint venture with mall REIT Simon Property Group, Authentic Brands has acquired the Lucky Brand, Brooks Brothers, Barneys and Forever 21 brands. The company has also reportedly made a $1 billion offer on the Reebok brand.
The company is also reportedly planning an IPO this year that would value Authentic Brands at $10 billion. In the meantime, it just keeps adding more brands to its stable.