Capsule

Varvatos Seeks to Ditch VF

October 12, 2010 BY CAPSULESNEWS

John Varvatos -- the edgy men's fashion designer who has long cultivated a rock 'n' roll image -- is looking to break free of his corporate owner, reports the NY Post. The New York-based outfitter of rock stars such as Iggy Pop, Jimmy Page and Alice Cooper is searching for a buyer to bring his company out from under the umbrella of VF Corp., the multibillion-dollar conglomerate that owns mainstream labels like Lee and Wrangler jeans, Nautica, Vans and The North Face. Sources told The Post the label has lately been in talks with as many as four potential acquirers. John Varvatos, whose ads have featured music legends Alice Cooper and Iggy Pop, and who partnered with Converse on a line of sneakers, is looking for a white knight so he can break free from his deal with VF Corp. A leading contender appears to be Li & Fung USA, an arm of the global trading giant that has been scooping up domestic fashion brands during the past few years. Other potential bidders include Phillips-Van Heusen, Jones Apparel, Warnaco and Kellwood, sources said. (NYP) More after the jump.

"We do not comment on rumors and speculation," a VF spokesman told The Post yesterday. John Varvatos' boutiques, along with sales to department stores such as Saks and Bloomingdale's, generate more than $60 million a year, sources said. Varvatos and VF have been quietly trying to sell the company for a sum greater than its annual revenue, and there have been hopes for a deal as soon as this month. Nevertheless, any transaction is likely to fetch considerably less, with Varvatos and VF hoping to take profits later as the company's performance improves, sources said. That's because Varvatos has racked up millions in losses during the past several years that have left it saddled with debt. Meanwhile, the fashion house is still struggling to achieve profitability. "Investors will line up to put money into the company, but the realization of value to the sellers will have to come later," said Richard Kestenbaum of Triangle Capital, an investment bank that isn't involved in the negotiations. Varvatos is looking for a white knight partly to dig himself out of debt, sources said. At the same time, his relationship with VF -- a fluke resulting from VF's 2003 acquisition of Nautica, Varvatos' previous owner -- was "a bad match from day one," according to a source close to the situation. "On one hand, you've got John, who is a classic New York-artist type who needs his freedom," the source said. "On the other side, you've got a bunch of old-school textile guys from North Carolina who are always chanting about how the team is more important than the individual." This year during New York Fashion Week, Varvatos' Bowery Street store -- once home to the legendary rock temple CBGB's -- put the rock mainstay back in the business with a concert headlined by Alice Cooper. Varvatos won kudos from the hip cognoscenti two years ago when he moved ahead with plans for the store at 315 Bowery after learning that a bank was considering moving into the space.