Frederick’s and Movie Star Finally Merge

It took more than a year, but women’s apparel cataloger/retailer Frederick’s of Hollywood finally completed its merger with intimate apparel designer/manufacturer Movie Star.

The combined company will be called Frederick’s of Hollywood Group, and according to a release, it will generate revenue approaching $200 million. Peter Cole has become executive chairman and will spearhead the company’s post-merger operations integration and strategic planning initiatives. Linda LoRe will continue as Frederick’s CEO, and Melvyn Knigin will continue to serve as Movie Star’s CEO.

LoRe said in the release that plans call for opening or renovating 40 to 50 Frederick’s of Hollywood store locations within the next 36 months. “We will also continue to focus on the expansion and enhancement of Frederick’s successful online and catalog businesses,” she added.

The merger is designed to lower sourcing costs, improve gross margins, and improve operational efficiencies. Frederick’s generated about $139 million in revenue for its fiscal year ended July 29, 2006, but its revenue tumbled to $56.7 million for the fiscal year 2007. For the fiscal year ended June 30, 2006, Movie Star recorded sales of approximately $51 million; that figure grew 23%, to $63.5 million for the fiscal year ended June 2007.

MULTICHANNEL MERCHANT had reported on the merger back in December 2006. What took so long to get the deal done? Thomas Rende, chief financial officer for Frederick’s of Hollywood, says the lengthy process required to finalize the deal was due to “natural proceedings, waiting for the SEC on a couple of occasions, numbers became stale and different numbers were filed.”

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