Talk about a full shopping cart: On Nov. 15, San Francisco-based Golden Gate Capital Corp. purchased two apparel cataloger/retailers–Beverly, MA-based Appleseed’s and Irvine, CA-based Draper’s & Damon’s. Golden Gate is the same private equity firm that purchased the Spiegel and Newport News catalogs last year.
Both Appleseed’s and Draper’s cater to women born at the beginning of the baby boom.
Appleseed¹s, 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. Appleseed’s was recently on the other end of the deal-making process: It had acquired the brand name and customer list of rival cataloger The Tog Shop in August (“Appleseed’s to Buy The Tog Shop”). Draper’s had estimated sales of $110 million in 2004.
Golden Gate had purchased Newport News in June 2004 and sister merchant Spiegel a month later, under the Catalog Holdings Corp. umbrella.
Golden Gate’s stake in the businesses is owned by a single holding company, which will have annual 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 an industry-leading portfolio of women’s apparel brands.
What’s more, Golden Gate continues to seek additional acquisitions of similar titles. “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 ofr 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 talked to company that serves a more youthful consumer.”
In Appleseed’s, Battle says, 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 not since Crosstown Traders—whose stable 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 is even further enhances the competitive hurdle rate of success in women’s apparel cataloging.”