Boston-based JW Childs will sell designer clothing brand Joseph Abboud to specialty retailer Men’s Wearhouse for $97.5 million, generating a 2x return multiple, according to a source with knowledge of the situation.
JW Childs declined to disclose a return multiple for the deal.
The exit comes nine years after JW Childs invested in Joseph Abboud, which saw its business take a serious hit in 2008.
“One of the major factors was the great recession and the impact on apparel, on menswear and on suits,” partner at JW Childs Adam Suttin told Private Equity International. “It was pretty significant. We needed to work through the decline in demand that occurred during the recession and then start to rebuild the business coming out of that.”
One of the ways JW Childs helped drive growth at the company was by developing Joseph Abboud’s licensing operations.
“The business was primarily the business of manufacturing suits and selling those wholesale to retailers and we evolved the business to have much more significant licensing,” Suttin said. “Instead of producing the goods, we license the brand name to other manufacturers who then produce goods under our label, to our design specifications. That allowed us to see pretty significant growth in the business without the requirements to invest in inventory or manufacturing assets.”
Joseph Abboud’s licensing revenue now stands at roughly five times the amount at the time of JW Childs’ investment, according to Suttin. The firm also helped the business expand into new geographies, establishing a large customer base in Asia.
JW Childs’ $1.75 billion Fund III, from which the investment in Joseph Abboud was made, is close to fully invested, with enough capital to make add-on acquisitions but not platform investments. The firm manages a portfolio of five companies from its Fund III and two from its Fund II.
JW Childs focuses on companies in the retail, consumer products and healthcare services sectors. The firm has invested approximately $3 billion in more than 40 businesses since its founding in 1995.