NEW YORK — The acquisition this month of 77-year-old Lady Ester Corp. by the Komar Co. and Russell-Newman Ltd. highlights the growing number of mergers and takeovers in the $12.4 billion innerwear industry.
In the Lady Ester deal, Komar Co., a 98-year-old sleepwear firm, purchased the daywear and sleepwear assets, including the Lucie Ann and Je T’Adore labels, and Russell-Newman, based in Denton, Tex., acquired the home furnishings business. Lady Ester’s home furnishings unit specializes in the development of innovative fabrics and bedding. Russell-Newman, in business since 1939, will relocate the specialty unit to a facility in Sheffield, Mass.
A purchase price was not available, but Lady Ester, which also was a key resource for private label sleepwear and lingerie, generated annual sales in excess of $50 million, according to industry estimates.
A main reason cited by industry executives for the renewed mergers and acquisition activity is consolidation at retail, particularly the Federated-May, merger, which will significantly tighten department store channels.
The Lady Ester purchase comes after other recent acquisitions, including:
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- The Carole Hochman Design Group’s purchase last month of On Gossamer, a contemporary bra and panties resource. The Hochman firm has a portfolio of licensed brands that include Betsey Johnson Intimates, and sleepwear by Oscar de la Renta and Lauren Ralph Lauren, as well as its own Carole Hochman label, generating annual revenues in excess of $150 million. On Gossamer’s annual volume is estimated at more than $25 million.
- The sale in February of Sara Lee Branded Apparel’s European division to an affiliate of Sun Capital Partners. The European Sara Lee deal, valued at about $117.5 million, included well-known brands Wonderbra, Playtex, Lovable and Gossard. The new division of the Sun Capital operation, based in Boca Raton, Fla., is called DBApparel.
- The acquisition in January of the $200 million Biflex company by Industrial Renaissance, a private equity firm based in Fairfield, Conn. The private label foundations specialist was purchased from Kellwood Co. There are plans to grow a licensed line of intimates and sleepwear bearing the Izod name.
Also fueling the M&A pace is Sara Lee Corp.’s plan to spin off the $4.5 billion Sara Lee Branded Apparel operation into a freestanding, publicly traded company. The spin-off is likely to be completed between June and September, when the company will be renamed Hanesbrands Inc.
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Charles Komar, chief executive officer of Komar Co., said the Lady Ester acquisition will bolster expansion into niche markets and “enable us to increase our sales.”
“There’s tremendous [retail and wholesale] consolidation going on,” Komar said. “[Lady Ester] had some niches we weren’t in and we weren’t as strong in, such as the fashion daywear business. We are acquiring things that fit well with our businesses and complement them.”
Komar noted that the new fashion daywear and sleepwear business will be a separate division with 15 new employees and will be ensconced at 183 Madison Avenue here, where the Komar firm will open new showrooms and offices this week. The location will also house sleepwear collections by Vera Wang Intimates, Eileen West and Liz Claiborne Intimates. Komar’s design, marketing and administrative areas will remain at 16 East 34th Street, he said.
David Martino, president and ceo of Russell-Newman, described the acquisition of Lady Ester’s home furnishing’s unit as “an absolute natural for our company.”
“It complements our growing hospitality division,” said Martino, noting that the company is considering using the Cypress brand of robes and sleepwear in bedding for major department and specialty stores, as well as catalogues.
Russell-Newman’s hospitality division caters to luxury hotels and spas. In addition to the Cypress name, the company also produces sleepwear and robes bearing the licensed Laura Ashley and Tommy Hilfiger names, men’s sleepwear by Jockey, and sleepwear for men, women and children by Caribbean Joe. The company recently launched a young contemporary Pink Chiffon sleepwear label as part of its internal growth plan.
Martino said the Lady Ester deal is part of a three-tiered strategy to build business in a “difficult environment.” The plan involves licensing ventures, future acquisitions and internal growth generated by beefing up key categories and tapping into specialty markets.