Guess?, Inc. (NYSE: GES) and global brand management firm WHP Global today announced a definitive agreement to acquire New York-based fashion brand rag & bone. Under the terms of the agreement, Guess? will acquire all the rag & bone operating assets, with Guess? and WHP Global to jointly own rag & bone’s intellectual property.
Since its origins in New York in 2002, rag & bone has established itself as a leader in the American fashion scene. Known for its authentic style, blending traditional craftmanship with modern cultural references, the brand has become synonymous over the years with effortless quality clothing for both men and women, with an innovative yet understated New York aesthetic and a strong expertise in denim.
Currently, the brand directly operates 34 stores in the U.S. and two stores in the U.K., and is also available in high-end boutiques, department stores and through e-commerce globally. In 2023, rag & bone generated unaudited annual revenue of approximately $250 million and adjusted EBITDA of $18 million.
Carlos Alberini, Guess? chief executive officer, said: “We are excited to add an iconic brand such as rag & bone to Guess?, further diversifying our portfolio with complementary customer bases and price points. We look forward to partnering with WHP Global to build on rag & bone’s heritage. Guess? has an incredible platform with a strong global distribution network and outstanding licensee partners that will enable us to power the growth and expansion of the rag & bone business. We expect the transaction to deliver earnings per share accretion in the first year and strong value creation for our shareholders for years to come.”
Paul Marciano, Guess? co-founder and chief creative officer, said: “rag & bone is a brand I have always loved and respected. It is a brand well known for its pre-eminence in American fashion that over the years has stayed true to its roots and founding values, with an unwavering commitment to quality and authenticity. This acquisition is the first one in the 43-year history of Guess?, and I am thrilled to welcome rag & bone to our family. I look forward to working with Andrew Rosen and the talented team at rag & bone to pursue the brand’s product and market expansion internationally.”
Yehuda Shmidman, WHP global chairman and chief executive officer, said: “The acquisition of rag & bone aligns us with powerful partners and grows WHP Global’s portfolio to over $7.5 billion in retail sales across 11 brands. We have great respect for rag & bone’s business and brand positioning, and look forward to building on its success as we capture the compelling opportunities ahead.”
Andrew Rosen, chairman of the board at rag & bone, said: “I am thrilled about this new relationship with Guess? and WHP Global. Today marks the beginning of an exciting new chapter as rag & bone joins forces with a much larger international fashion company. It’s a great opportunity for our team to take the brand to the next level, blending our unique styles and respective expertise to create new possibilities for rag & bone on a global scale.”
rag & bone will continue to be based in New York City. As part of the Guess? portfolio, the rag & bone team will operate as an independent fashion brand with a focus on continuing to provide unique and timeless collections to its customers.
Highlights of the transaction:
Creates Strong Partnership with WHP Global, One of the Leading Global Brand Management Companies Today. This transaction will enable rag & bone to maximize global expansion by benefiting from both Guess?’ and WHP Global’s platforms and distribution and licensee partners all over the world.
Leverages Guess?’ Powerful Infrastructure to Accelerate rag & bone Growth and Drive Synergies. Over the years, Guess? has developed a strong global infrastructure and network of licensees and wholesale partners. Through this transaction, rag & bone will benefit from Guess?’ ability to support the growth of its product offerings, expand the brand’s reach into new markets and drive operational efficiencies.
Expands Guess?’ Global Lifestyle Brand Portfolio with a Commitment to Timeless and Innovative Designs Customers Love. The acquisition of rag & bone underscores Guess?’ long-term growth strategy to power a bigger business, while maintaining a focus on delivering the best products for customers. This transaction brings together highly complementary price points and customer bases along with creative teams that are dedicated to upholding a reputation for innovative design and uncompromising quality.
Positions Guess? to Drive Increased Value for Shareholders. This transaction is consistent with the Company’s commitment to generate strong value for its shareholders through an efficient and opportunistic approach to capital allocation. The potential in terms of revenue growth and operational efficiencies for rag & bone is expected to make the transaction accretive to earnings per share for Guess? in the first year.
Transaction Details
Guess? and WHP Global have entered into a definitive agreement to acquire rag & bone, under which Guess? will contribute $56.5 million. Additionally, there is the potential for an incremental earnout consideration of which Guess? will be responsible for a maximum of $12.8 million, based on preset levels of sales and EBITDA performance over the course of rag & bone’s 2024 fiscal year.
Under the terms of the agreement, Guess? will acquire and own all the brand’s operating assets and assume the related operating liabilities of the rag & bone business. In addition, a joint venture owned 50% by Guess? and 50% by WHP Global will acquire rag & bone’s intellectual property. Guess? and the joint venture will enter into a license agreement granting Guess? the exclusive right to use rag & bone IP to manufacture licensed products worldwide and to sell licensed products in specified territories in exchange for Guess?’ payment of a royalty fee.
The acquisition is subject to customary closing conditions, including regulatory approval, and is expected to close during the first quarter of Guess?’ 2025 fiscal year.
Advisors
The Sage Group, LLC is serving as financial advisor and O’Melveny & Myers LLP is serving as legal advisor to Guess?, Inc. Kirkland & Ellis LLP is serving as legal advisor to WHP Global. Solomon Partners, L.P. is serving as financial advisor and Golenbock Eiseman Assor Bell & Peskoe LLP and Katten Muchin Rosenman LLP are serving as legal advisors to rag & bone.
Note: The content of this press release has not been edited by Fibre2Fashion staff.
Guess and WHP Global have agreed to acquire fashion brand rag & bone.
Guess will own operating assets, and both Guess and WHP Global will jointly own intellectual property. Rag & bone generated approximately $250 million in revenue in 2023.
The deal aims to diversify Guess’s portfolio, leverage its global infrastructure to accelerate rag & bone’s growth.
Fibre2Fashion News Desk (HU)