Spiegel parent buys two more

San Francisco-based Golden Gate Capital Corp. is well on the way to becoming a major player on the women’s apparel catalog scene. The private equity firm, which purchased the Spiegel and Newport News catalogs last year, on Nov. 15 acquired two apparel cataloger/retailers: Beverly, MA-based Appleseed’s and Irvine, CA-based Draper’s & Damon’s.

Appleseed’s, which operates three retail stores and three outlet stores, has estimated annual sales at $110 million, with an estimated $10 million in earnings before interest, taxes, depreciation, and amortization. For its part, Appleseed’s had acquired the brand name and customer list of rival women’s apparel cataloger The Tog Shop in August.

Founded as a store in 1927, Draper’s & Damon’s now operates 49 stores, a Website, and a catalog business with an annual circulation of more than 30 million. Draper’s had estimated sales of $110 million in 2004. Both Appleseed’s and Draper’s cater to women born at the beginning of the baby boom.

Golden Gate had purchased Newport News in June 2004 and sister mailer Spiegel a month later, under the Catalog Holdings Corp. umbrella. Golden Gate’s stake in all four businesses is owned by a single holding company, which will close out the year with revenue in excess of $750 million. While Appleseed’s, Draper’s, and Newport News/Spiegel will continue to operate independently, there exist significant opportunities for each business to benefit from being part of a large portfolio of women’s apparel brands.

More to come

Don’t expect Golden Gate to put away its checkbook for the time being. “Golden Gate has made it clear that they want to build a billion-dollar family of apparel companies, and they want to do it expeditiously,” says Craig Battle, managing director of Princeton, NJ-based investment bank Tucker Alexander. “They have talked to just about every major apparel company I can think of. They seem to be looking at more-mature companies, although they have talked to a company that serves a more youthful consumer.”

In Appleseed’s, Battle continues, Golden Gate is buying a company on the move: “Over the past several years, Appleseed’s has spent considerable energy revitalizing the brand and upgrading its distribution facilities and management and initiated a retail rollout strategy.”

Larry West, president of New York-based investment bank West Cos., says that not since the 2002 formation of Crosstown Traders — whose stable of catalogs includes Monterey Bay Clothing Co., Bedford Fair, and Lew Magram — has the industry seen such a roll-up in women’s apparel merchants.

“This is smart strategically, as it is a roll-up of similar customer profiles and customer lists that will be ideal for cross-modeling and cross-prospecting,” West says. “It obviously offers excellent economies of scale for all titles involved for importing, new product development, and order fulfillment. This even further enhances the competitive hurdle rate of success in women’s apparel cataloging.”

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