Quiet Growth Era Over as BCBG Is Buying Up Stores

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Owned by a Frenchman, BCBG Max Azria is known for its European flair. The dresses it sells in its U.S. mall and freestanding stores top $200 and have sophisticated styling.


What BCBG doesn’t have is much of a presence in Europe and that’s about to change.


Vernon-based AZ3 Inc., which operates the BCBG stores, has already acquired a controlling stake in French sportswear retailer Alain Monoukian for $78.5 million and is in talks to buy Don Algodon, a clothing retailer based in Spain, for an undisclosed amount. The latter purchase is expected to be finalized this month.


Combined, the acquisitions would add 355 stores across Spain, Portugal, Morocco, France and Belgium to AZ3. The company now operates 174 BCBG stores worldwide, including 30 in Canada, France and Japan.


After years of incrementally augmenting its store base, the 16-year-old company has opted to buy large chains, rather than picking up smaller ones to fuel rapid growth. Company officials have said that Alain Monoukian and Don Algodon acquisitions could be the start of even more takeovers.


“Europe is a very important position for us,” Max Azria, the chief executive of AZ3, told Women’s Wear Daily. “Our goal is to expand…that will be our strategy.”


AZ3 plans to convert some Alain Monoukian and Don Algodon stores to BCBG outlets, while keeping the existing nameplates on others. The company has yet to fully detail the extent of the changes.


With prime retail property tight in the United States, Ilse Metchek, executive director of the California Fashion Association, said AZ3 is making a smart move by acquiring large foreign chains. European tax policies and financial arrangements make it difficult for American companies to spread stores across Europe by growing organically.


“It is extraordinarily prohibitive for an American retailer to be a European store,” said Metchek.


Buying existing chains also helps BCBG because the stores are already integrated into the European distribution system. Metchek said the distribution system varies significantly from its American counterpart, hindering American retailers when they open shops abroad.


BCBG’s dresses, shirts, skirts and other items, made under various labels including To the Max, Parallel and Herve Leger, have a stylish look that could have widespread appeal in Europe. Metchek said she expects BCBG to be a good fit in the European market.


Meanwhile, AZ3 is not stopping domestic growth of the BCBG chain. The company launched its 5,600-square-foot Rodeo Drive store this month and is planning to add at least 20 more stores this year.

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