TOMPKINSES IN DEAL TO SELL LAST HOLDINGS IN ESPRIT TO PARTNER
Byline: Anne D’Innocenzio
NEW YORK — After a number of turbulent years, founders Susie and Doug Tompkins are severing their last ties to Esprit. They have agreed to sell their interests in the worldwide sportswear company to Michael Ying, Esprit’s partner in Hong Kong.
Esprit de Corp. — the U.S. operation, which has been controlled by Susie Tompkins — also announced an agreement to restructure its debt. Oaktree Capital Management and Cerberus Partners will become controlling shareholders of the U.S. firm in a debt-for-equity exchange that will cut the company’s current debt obligations by almost two-thirds.
Jay Margolis will continue as chairman and chief executive officer of Esprit de Corp. and will become an equity investor in the U.S. company.
Esprit Worldwide comprises three discrete entities: in Europe, the Far East and the U.S.
In addition to Ying, the other Esprit global partner is Jurgen Friedrich, who controls operations in Europe.
With the new ownership, the Asian and European operations will be consolidated, and that combined company will continue to own a minority stake in the U.S. operating company, Esprit de Corp.
The transactions are expected to close by the end of the year. Financial terms were not disclosed.
Reports of an imminent sale were carried in these columns Oct. 1. Esprit Group hired Goldman Sachs last May to explore strategic alternatives for the junior sportswear and accessories brand, including the possible sale of the company.
Susie and Doug Tompkins started Esprit 28 years ago and built the company to a junior sportswear phenomenon that hit a peak wholesale volume of $500 million in the mid-Eighties. With international partners, they also turned it into a global brand.
However, the couple ran into marital problems, which coincided with business problems. Volume floundered in the U.S. and in 1989, the Tompkins divorced.
In June 1990, Susie Tompkins and an investor group bought out her ex-husband’s stake in the U.S. business. Doug Tompkins continued to hold a stake in the worldwide business, however. Susie Tompkins remarried early this month and is now Susie Buell.
“This is a positive move,” Donald La Vigne, a member of the board at Esprit Group, said Tuesday. “The transaction creates the opportunity for the European and Asia businesses to be fully integrated and provides the U.S. company with a strong financial basis to grow and expand its market and brand.”
He added that the move will enable the company to work efficiently in product development and image consistency.
Since Susie Tompkins took control of the U.S. company in 1990, the firm has had a half-dozen top executives parade in and out, trying to recapture the Esprit success. They included Corrado Federico, Isaac Stein, Fritz Ammann and David Folkman.
Esprit U.S. currently does about $300 million in total wholesale volume, with about $120 million in apparel and the rest in accessories and licenses. Worldwide retail sales for Esprit Group last year were $1.5 billion.
For a few years, the company has tried to find its focus. One of its moves was to close the Susie Tompkins bridge line this year and include some of those styles in the signature collection.
At the same time, Esprit’s European and Asian businesses have been strong. Esprit in Europe spruced up the London flagship store earlier this year and said it would target customers below 25 years old, instead of the 25-to-35-year-old group.
The Esprit brand is sold in 44 countries, and in addition to its department and specialty store accounts, there are over 350 Esprit stores.
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