Could Paul Guez be turning blue into green?
That’s the question now that signs are there is a glut in the blue jeans market and Blue Holdings Inc. has a shelf registration on file with the Securities and Exchange Commission to sell more than 23 million shares.
That would allow the founder, chairman and chief executive of the Commerce-based maker of premium Antik brand jeans to dispose of some 18 million shares of the company’s stock for a cool $107 million.
For now, though, the company insists a big pay day is not in the offing, despite the fact Blue Holding’s shares have been holding steady around $6 and some analysts think the premium jeans market is in for a shakeout.
“Mr. Guez has told me many, many times he won’t be selling a single share,” said Patrick Chow, the chief financial officer of Blue Holdings, which is publicly traded on the Nasdaq. “This is his baby and his vision.”
At Blue Holdings, Guez clearly holds the reins.
Together with his wife Elizabeth, the former chief operating officer of the company, he owned about 72 percent of the outstanding shares as of May 9. The remaining shareholders include Chow, members of the design team, Guez’ daughter Irene and executive Kevin Keating, who orchestrated the reverse merger that took Blue Holdings public last year.
For his part, Chow said he’s holding on to his shares a total of 130,000 for the long term. “There is no intention as far as I am concerned to sell everything,” he insisted, though Chow said other share sales could take place in the near future.
Eric Beder, an analyst with Brean Murray & Co., said that the company might want to use cash generated by any sales toward retail operations or acquisitions.
Indeed, competitor and L.A.-based premium denim company True Religion Apparel Inc. has already said it is diversifying its product line. True Religion, which went public in a reverse merger like Blue Holdings, is on the lookout for a private equity firm to get the company out of the public markets.
Ilse Metchek, executive director of the California Fashion Association, isn’t surprised that jeans companies would leave the public markets behind so soon after joining them.
“There is an oversupply,” Metchek said. “If you were in the jeans business 100 percent and you tried to predict a third quarter profitability, you would have a hard time.”
For the quarter ended March 31, Blue Holdings did tally an increase in net sales to nearly $11.9 million from slightly more than $5 million for the same period a year earlier. Net income went up to just over $680,000 from around $466,000.
Dog Candy
Taste of Nature Inc. is going to the dogs.
The Beverly Hills-based candy producer is making and distributing dog treats under a license agreement with Westbury, N.Y.-based Nathan’s Famous Inc., the company behind Nathan’s hot dogs. The company plans to sell the treats at some 1,300 pet specialty stores.
“This is the first time a human brand has ever gotten into the beef pet treat space. It is an interesting angle to take the brand,” said Scott Samet, Taste of Nature’s co-president.
The treats come in two varieties: a 1.5 ounce single-serve product in three flavors (cheddar, bacon and smoked beef) that costs around $2.50, and a 4-ounce product of bite-size hot dogs that costs $4.99 to $5.99.
Pet stores are a new distribution channel for Taste of Nature, which started in 1992 vending healthy snack foods to movie theaters and later entered the packaged candy market. Samet sees the pet products as a growth area to further reduce the company’s dependence on movie theater sales. Last year, sales of its products were flat at movie theaters.
“Years ago, I would say we were too concentrated, and we have taken stapes to diversify,” said Samet. “The pets would be a further diversification.”
It’s estimated that the dog treats will generate revenues of $2 million to $3 million in their first year, with the company expected to rack up $25 million in sales for all its products, which include Care Bear Gummi Bears and Simpsons Fruit Snacks.
Taste of Nature is looking to add more products to its pet assortment. Upcoming additions could include a mint for pets and a gummy vitamin product.
More Sizzle
Culver City-based Sizzler USA has announced its first big expansion move since being taken private last year.
Franchisees will open 29 steak and seafood restaurants in existing and new markets featuring the chain’s warmer, updated d & #233;cor and emphasis on its steaks, seafood and salad bar. The chain also has returned to its original waiter service and eliminated its all-you-can-eat buffet as it seeks to attract a younger demographic.
“We spent four years listening, testing and remodeling to reinvent Sizzler. In the last year, it has all come together,” said chief executive Ken Cole in a statement. “With each new restaurant opened, the franchisees are sending a clear message that they like the changes, and that also is helping us attract new franchisees.”
Sizzler was acquired by Pacific Equity Partners last year and recently relocated to Culver City from Sherman Oaks. Sizzler’s expansion strategy is to beef up its presence in the West, where its base is the strongest, and selectively introduce the brand east of the Rockies and internationally in Asia and Latin America.
Among the cities where new outlets are going: Victorville; Santa Clarita; Sacramento; Turlock; Menifee; Springdale, Ark.; and Las Vegas.
Staff reporter Rachel Brown can be reached at
[email protected]
or by phone at (323) 549-5225, ext. 224.
