Is Jean Touitou ready to give up A.P.C.?
In March 2020, in the midst of the emergence of the pandemic in France, Jean Touitou decided, against the trend at the time, to cancel his A.P.C. show at Paris Fashion Week. A few months later, the director sent an open letter to the fashion industry explaining his vision and asking "Why A.P.C.? And delivered an answer: "So, after rejecting the hypothesis of “refusing to jump,” I started considering that there was a new mission that I and we had to accomplish: ensure the survival of A.P.C. and its esthetic and moral values."
At the end of 2022, has this art lover found a new way to ensure the survival of a label he created in 1987? The director is in the process of selling his "Atelier de Production et de Création", according to information from the business weekly Challenges. The owner of the French brand with 55 outlets has apparently given a mandate to the investment bank Rothschild & Co to find investors, which sources have confirmed to Fashionnetwork.com.
At nearly 72 years old, the founder would thus be looking for an exit and ready to sell all or part of his beautiful brand A.P.C. It seems its shareholders have settled the shareholding agreement of the A.P.C. holding, which in the spring was held very largely by Jean Touitou and his relatives.
The French company is certainly in the best possible position to undertake this project. In 2017, the Audacia fund, which had a stake of less than 10% of the capital since 2012, withdrew. And by 2018, the A.P.C. group had decided to disengage from the Vanessa Seward label, which at the time was making less than €4 million in sales but accumulating operating losses, to focus on its eponymous brand.
This concentration of resources enabled the A.P.C. teams to get through 2020 rather smoothly. The company took advantage of a scheme put in place by the French government during the lockdowns and took out a loan of nearly 10 million euros, guaranteed by the state. At the end of the year, the group's activity declined sharply, with revenues falling from 72 million euros in 2019 to less than 60 million euros and losses of more than 3 million euros a year later.
But in 2021, A.P.C. is making a tremendous recovery, with a 39% growth in its activity, and is even recording its best year yet, with 82 million in revenues across all its activities. The company has managed to grow in all areas of activity in 2021.
Its sales are even up 14% compared to its fiscal 2019. While its retail sales in Europe and the United States, which both experienced disparate lockdowns, were still below pre-crisis levels, its online sales jumped to over €10 million. Although with some competitors making a 20% increase on their online sales, the brand still has room for growth in this area. In addition its wholesale business has grown significantly in the euro zone. Overall, the company turned a profit, compared to a net loss the previous year.
Of course, like many fashion players, A.P.C. is facing the arising challenges of 2022, which have inevitably dampened its momentum as seen at the beginning of the year (+14% year on year in the first quarter in its retail network, according to elements filed with the commercial court). International tensions, leading to an increase in the price of materials and production and logistics costs, may have affected some points of profitability.
The brand appears to be a prime opportunity for investors. Its casual offer, with timeless basics supported by an artistic discourse, often relevant collaborations and a lifestyle statement, is reassuring as opposed to a style that is too ephemeral.
The company has a coherent network of stores and has been expanding its business internationally for several years. Its domestic market represents less than 20% of its activity, as does the United States. The company is developing its network with around 55 stores and a presence in international department stores. In Europe, creating last year a Danish subsidiary, it opened a store in Copenhagen. It is looking to open stores in major European cities, and is considering ways to expand in Asia, particularly in China. It also has some 350 high-level international multi-brand clients. This is enough to smooth out the risks of a drop in activity in one region of the world.
The company's strong international presence and its ability to create a lifestyle environment seems to be a strong asset. The company has plans to develop a perfume offer, but has also changed its statutes in order to be able to offer a restaurant activity. In short, it is the perfect way to create A.P.C. living spaces.
Who would invest in A.P.C.?
What is the value of the brand? The recent increase of interest rates has cooled several projects of total or partial sales of fashion companies.
According to sources mentioned by Challenges, a deal may have been made at around 1.5 times the sales, i.e. a little over 160 million euros. In 2021, the company's Ebitda will exceed 10 million euros. In the sector, deals are made at between 9 and 11 times the Ebitda. That is to say approximately 95 to 120 million euros. This suggests a negotiation between 100 and 200 million euros, if the competition is fierce.
At this amount, several players can enter the race. The brand development expertise of L Catterton, which works with Ganni, Etro and Jott, makes it an eligable candidate. Eurazeo, which has invested in Axel Arigato, Bandier and Herschel, could also have its eye on A.P.C. Other powerful international players could also be interested in the brand, even if it is not totally aligned with their usual investment formats. Players such as Permira, which recently bet on Dr. Martens, Golden Goose and General Atlantic, and which proved the potential of a French brand with Sézane. Or even American giants who could potentially benefit from the power of the dollar.
And what about the big fashion and luxury groups? The profile does not suit the structures of LVMH, Kering, Richemont or even Puig. But what about Artémis, the company that oversees the investments of the Pinault family? Or some American groups, wishing to internationalize their brand portfolio? In Europe, OTB, Renzo Rosso's group, founder and owner of Diesel, has made clear its intentions to make new acquisitions. A denim lover, taking over a brand, whose denim legacy dates back to 1989: that's a story worth telling.
In any case, the founder, who did not respond to FashionNetwork.com's requests, seems to have been preparing this outcome for several months. Not only from a financial point of view, but also through nods to his friends and relatives. At the beginning of 2022, Jean Touitou unveiled an A.P.C. campaign featuring his artist friend's children: "All our friends have participated in what A.P.C. has become today and I want to pay them a special tribute," he said at the time. He also expanded his "Interaction" concept, giving a special place to artists. In November, for his seventeenth "Interaction", the creative chose to put forward his own ideas to celebrate his brand's 35th anniversary... or maybe it was more than that.
"You don't need a huge wardrobe to play it straight," he said. This collection was created around a dogma, monochrome, and around the necessity to refuse repressive 'de-sublimation'. In other words, leave me alone, let me do whatever I want. I decide that we have enough clothes in our closet, and I decide to add a limited series of pieces: a P43 army jacket, a pair of A.P.C. jeans with a chain on the side, a Shetland (a jumper) and that's all. And since I really like to add meaning to what I do, it's about superego instances, absurdity and economy as an act of war."
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