Fashion house’s fashion, fashion house deal gets a boost
Business Insider article Business: A boutique fashion house, Fashion House of New York, has been sold for $2.9 billion to the retail giant Walmart.
The deal, announced on Tuesday, also includes the sale of the clothing store and the assets associated with the fashion house.
The sale, first reported by the Wall Street Journal, also included a $3.2 billion equity infusion and $2 billion in debt financing.
The company had $6.5 billion in cash and $5.3 billion in short-term debt as of December 31, the report said.
The news is expected to help ease concerns about a potential financial downturn at the retail powerhouse, which has struggled to attract shoppers after a number of fashion house acquisitions and the collapse of the fashion business.
“This is a very significant and significant transaction for our brand, for our people and for our industry,” Walmart Chairman and CEO Doug McMillon said in a statement.
“We believe this transaction will create a new and vibrant fashion house for New York City.”
The deal is also expected to strengthen the Macy’s and Kohl’s brands in New York.
“As the largest retailer in the U.S., it’s a testament to our commitment to New York and our people that the Macy and Kohls brands continue to thrive here,” McMillon told the Journal.
The Macy’s store will continue to operate as a standalone location, and will remain open to the public.
The Kohls store will become a standalone store, but will also open to customers and be closed to the general public.
“Kohl’s has long been known for being a leader in luxury brands in our country, and the opportunity to create a world-class retail experience for our customers and our associates is a win-win for both brands and our city,” New York Mayor Bill de Blasio said in the statement.
The two companies have been in business together since 2009.
Macy’s said it would continue to sell its clothes at the New York Stock Exchange through 2021, and that the sale would give the retailer a boost in cash.
The $2-billion equity infusion is a substantial amount for a fashion house that has seen its revenue fall from $9 billion in 2010 to $4.3 million in 2013.
The mall’s current cash flow is about $5 billion, but the company will likely use some of the new money to spend on new stores and a new advertising campaign.
The retail giant’s stock price rose after the announcement.
The share price rose 1.6% to $24.84.