Downtown menswear company Stikeleather Apparel Holdings has acquired women’s online retailer White Plum and will move its operations from Modesto to downtown’s Garment District.
White Plum, whose website says it was founded with “the notion that everyday women should be able to express their creative styles without breaking the bank,” makes and sells tunics, leggings, shoes, and accessories at prices between $13 to $130, targeting women between 25 and 45. Stikeleather, which describes itself as “a contemporary menswear label that explores the border between street wear and sportswear with minimalist style lines” and sells shirts, jackets, and vests from $60 to $260, targets 25- to 35-year-old men.
“(We) had been discussing acquisition targets,” said Ian Stikeleather, chief executive of his eponymous company. “I wanted something that didn’t cannibalize the existing brand.”
Terms of the deal, arranged by Belmont Acquisitions, a Scottsdale, Ariz., banking and advisory firm specializing in businesses with revenue of less than $50 million, were not disclosed. White Plum had sales last year of $9.5 million, and one industry analyst said apparel companies could trade anywhere from one-half to two times revenue, depending on a variety of factors.
White Plum founder Hilary Zwahlen; her husband, Rodney; and brother-in-law Jay will take an equity stake in Stikeleather as part of the deal and will serve as consultants.
Ian Stikeleather said financing for the acquisition was provided by a loan from an institutional investment company in Florida, which he declined to name.
He said the lender was drawn by rapid revenue growth at White Plum, which Hilary Zwahlen started in 2012 with the goal of making $1,000 a month.
“If a mom-and-pop with no experience started it and made $9.5 million (in three years), and it’s run by someone with experience in the apparel industry, the lender could see all the money and interest,” Stikeleather said of the willingness of the lender to back the acquisition.
Jon Tullo, managing director in Belmont’s Irvine office, brought White Plum to Stikeleather’s attention. He thought the addition would help the contemporary menswear label, which started in 2010 and uses special magnets to fasten garments, in its pitch to retailers.
“Stikeleather doesn’t have mass appeal,” said Tullo. “It gave him the ability to acquire critical mass overnight. If Stikeleather is going to talk to mass retailers, it’s a lot easier conversation.”
Move to Los Angeles
Stikeleather began his company in Zionsville, Ind., and said he moved it to downtown Los Angeles in 2012 because of better production options and access to clothing vendors.
The acquisition would help make his company, which has been operating at a loss, profitable this year and would create synergy between the two clothing makers, according to Stikeleather. He declined to disclose his company’s revenue.
White Plum had been transporting stock from the Garment District to Modesto, so it made sense to bring its operations to his L.A. headquarters, he said.
“They’d plateaued because of the geographic location of their business,” he said. “They couldn’t really expand the business without a move to a bigger market.”
He plans to take both brands into retail stores, although he said it was too early to open branded stores. White Plum is only available online through its website, as well as Jane.com and Zulilly.com.
Stikeleather said he plans to grow White Plum by increasing its marketing; adding plus-size, children’s, and upscale lines, along with other products. He also intends to introduce his trademark neodymium magnetic closures, Magnex, to White Plum’s clothes in the fall.
Marshal Cohen, chief industry analyst at market research firm NPD Group in Port Washington, N.Y., said the deal made sense because the differences between the companies would allow them to complement each other and the synergy would create economies of scale.
“They’re running side by side,” he said. “They can feed one another. It’s not a case of 1 + 1 = 2 but 1 + 1 = 3.”
