NEW YORK ? Jones Apparel Group has acquired a 50 percent stake in Rachel Roy, giving the $3.85 billion apparel giant a long-desired entry into the high-end contemporary market and providing the small design house with vital operational backing.
The fashion company’s founder, Rachel Roy, will continue to design and produce the line, with the same 18 employees, in her showroom at 148 West 37th Street here and in the same factories. But with financing from Jones, the three-year-old label will be able to expand beyond its current collection into additional categories, with possibilities including fragrance, footwear, accessories, home and ? closer to the designer’s heart ? a more affordably priced line. Expanding globally and opening freestanding stores are also on the to-do list.
“So many different areas of growth excite me,” Roy said. “Having a partner like Jones that is willing to support us is like getting a big brother or family member.”
The deal creates a three-way venture between Rachel Roy, Jones and TSM Capital, which acquired a significant minority stake in Rachel Roy in November. Jones will assume operations of the existing designer collection business under license and also will market the line.
Jones, a predominantly mainstream vendor that owns Nine West and Anne Klein, has been looking to invest in the contemporary arena for years, but the high multiples that hot market had demanded were cost prohibitive.
The terms of the deal were undisclosed, but “there wasn’t a big exchange of money here,” said Jones chief executive officer Wesley R. Card, “but we all have a share in the potential upside of this business.”
The result is a lot of industry veterans focusing their attention on the young line. On the side of the Roy company, there is the designer herself and her husband and co-founder, Damon Dash, as well as Stephen L. Ruzow, who has been consulting for the brand. From TSM, there are co-founders Marvin Traub, Mortimer Singer and Aslaug Magnusdottir. From Jones, Susan Metzger, ceo of Jones’ women’s wholesale sportswear division, will be responsible for the operations of the business.
“When I first got into designing Rachel Roy, I was given this platform by Damon to work on my dream,” said Roy, who started her career as an intern at Rocawear. “And no matter how hard I worked, I loved it and never felt the pain ? Damon felt all of that.”
