NEW YORK — Authentic Brands Group is “taking a breather” in its ongoing negotiations to buy the John Varvatos brand, but its chief executive officer is hopeful that a deal can eventually be completed.
Jamie Salter, ceo of ABG, told WWD, “We love the brand, we think it’s great. There were just some issues we couldn’t work through.”
Sources say that includes working with existing licensees and negotiating severance packages.
Although Varvatos is losing a reported $15 million a year, ABG operates under a licensing model and if it strips the overhead from the brand, it can be economically viable.
Varvatos, which has reported sales of $325 million at retail, can be profitable if operated under a “consolidation model,” Salter believes. But if a deal cannot immediately be worked out, he said ABG will work with Varvatos’ majority owner, Lion Capital, to expand the label, both in the U.S. and overseas.
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Salter stressed that Lion is also a part owner of ABG, with a 21.5 percent stake, so “the seller is also the buyer. So they have to be happy with the deal we make.”
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“If can get everything worked out, we’ll do the deal. If not, I’ll will help my partner make John Varvatos do well,” he added.
Salter said ABG now owns 26 brands that operate 2,100 stores around the world and it has $5 billion in retail revenue.
Reached on Saturday, designer John Varvatos said since Lion invested in ABG in March, “there have been on and off discussions about potential partnering with John Varvatos. Regardless of those discussions, we continued to grow our business and execute plans for our brand’s future. We learned that ABG has a great team and model that works for them, but never found a clear path on how it could work for us.”
Regardless, Salter is hopeful that he may one day be able to consummate a deal.
“I think we’ll work it out eventually,” Salter said. “We were on the five-yard line and I think we’ll get it over, but it [the deal] has to be solid as a rock.”
Varvatos founded his company in 1999 after working with Ralph Lauren and Calvin Klein. Known for his rock-‘n’-roll aesthetic, Varvatos showed his collections during Milan Men’s Fashion Week until two years ago, when he shifted his runway show to New York. The designer also has had a deal with Converse to design a line of John Varvatos sneakers for that brand’s Chuck Taylor All-Stars collection.