Here’s more context suggesting that 1) the Stuart Weitzman deal was entirely driven by Irving Place, and 2) the company is likely near peak margins.
Based on the feedback thus far, we struck a chord somewhere along the line with our JNY note this weekend. Footwear News has also since published what I thought was an insightful interview with Stuart Weitzman. Here are some excerpts that add fuel to the fire. Check out the full article at www.wwd.com/footwear-news/ for additional context.
FN: Why was now the right time for a deal?
SW: It wasn’t necessarily the right time or the wrong time for me. It was obviously the right time for Irving Place Capital.
Hedgeye Retail: This was entirely driven by what the private equity partner wanted – or needed.
FN: You’ve been looking to hire a new CEO and other top executives. How will this deal affect the search?
SW: If Jones can lead me somewhere, that’s great. I haven’t yet found the [people] I want, and maybe they have resources that can give me more opportunity to choose. ... With or without an association with Jones, I have to start passing a lot of this [work] along to talented people. [I’m the CEO, chief creative force and chairman], and I shouldn’t be wearing all these hats. We have the same officers running the major parts of the company as we did many years ago, and we’re [nearly] 20 times bigger. We [have been] stretched thin.
Hedgeye Retail: Find me any fashion brand that hit a point where it was ‘stretched thin’ with resources and had too few executives wearing too many hats that was NOT operating at peak margins. Seriously… being ‘stretched thin’ equals running near max utilization. To maximize throughput, you need to invest in more talent. Is JNY up to the task?
FN: Your wife, Jane, is a big part of the company. Will the deal affect her role?
SW: Certainly not. She’s EVP and handles special projects, particularly in public relations events and accessories.
Hedgeye Retail: Remember when LIZ bought Juicy and noted how vital the founders (incl Gela Nash-Taylor – wife of John Taylor, bassist from Duran Duran) were? Where are they now?