Golden Gate gobbles another

Oct 01, 2006 9:30 PM  By

San Francisco-based private equity firm Golden Gate Capital Corp. is wasting no time in its quest to build a billion-dollar family of apparel companies. On Sept. 6 it announced the acquisition of Irvine, CA-based cataloger Carabella Corp., which consists of the Carabella and A.B. Lambdin women’s apparel businesses.

Carabella and A.B. Lambdin will become part of New York-based Spiegel Brands, which itself is part of Golden Gate’s Catalog Holdings Corp. Terms of the transaction were not disclosed.

New York-based Spiegel Brands is the parent company of the Spiegel apparel and home decor catalog and the Newport News women’s apparel book. Golden Gate acquired Newport News and Spiegel in the summer of 2004. It bought two women’s apparel cataloger/retailers, Appleseed’s and Draper’s & Damon’s, in November 2005, and multititle mailer Norm Thompson Outfitters in March 2006. Carabella Corp., meanwhile, had purchased Americus, GA-based A.B. Lambdin in November 2005.

Both Carabella and A.B. Lambdin specialize in swimwear, which is also a major category for Newport News. And like Newport News, Carabella caters to women in their 20s and early 30s; A.B. Lambdin targets women 30-55, as do Appleseed’s and Draper’s & Damon’s.

The deal reunites A.B. Lambdin with another apparel brand for mature women, The Tog Shop. A.B. Lambdin had sold the brand name and customer list of The Tog Shop to Appleseed’s in August 2005 — just three months before Appleseed’s was acquired by Golden Gate and A.B. Lambdin by Carabella.

Not much of a surprise

“The only thing surprising” about Golden Gate’s latest deal, says Craig Battle, managing director at Princeton, NJ-based investment bank Tucker Alexander, is the relatively small size of Carabella Corp. Estimated annual sales for Carabella and A.B. Lambdin are $30 million. In comparison, Golden Gate’s previous catalog acquisition, Norm Thompson, had sales of roughly $200 million.

“But the guys at Golden Gate have made it clear to the world that they’re interested in every apparel catalog that exists in the United States,” Battle continues. “I think they’re looking at every single one.”

As for the deal itself, Battle says, “it’s an interesting add-on to the Newport News/Spiegel group.” Carabella offers a younger customer who “probably fits with what Newport News is doing,” Battle says. “With the talented management team led by Geralynn [Madonna, CEO of Spiegel Brands], they must think adding this will resonate with their customers.”

Madonna, in fact, says that the acquisition offers Spiegel Brands “a great opportunity to own a larger share of the growing swimwear market and capitalize on the synergies with our existing businesses.” Spiegel Brands, she says, was attracted to Carabella Corp. because of the “tremendous growth potential of the Carabella and A.B. Lambdin brands in both swimwear and travel merchandise.”

Inside the Golden Gate

San Francisco-based private equity firm Golden Gate Capital has been snapping up catalogs — largely in the women’s apparel category — for more than two years through its Catalog Holdings Corp. portfolio company. Golden Gate prefers to fly under the radar, so not much is known about the company other than that it’s a multisector fund and “opportunistic” in its approach and that it has more than $2.6 billion in capital under management. This we do know: Golden Gate is clearly on a roll with rolling up apparel merchants. Here’s what it has acquired so far.

ACQUISITION DATE COMPANY PRODUCT CATEGORY
June 2004 Newport News Women’s apparel
July 2004 Spiegel Catalog General merchandise
November 2005 Appleseed’s* Women’s apparel
November 2005 Draper’s & Damon’s Women’s apparel
March 2006 Norm Thompson Outfitters** Apparel, gifts, home goods
September 2006 Carabella Corp.*** Women’s apparel
* Includes the Tog Shop, which Appleseed’s bought in August 2005 ** Consists of the Norm Thompson, Solutions, and Sahalie brands *** Includes A.B. Lambdin, which Carabella acquired in November 2005