Maurices being sold to European private equity firm
A European private equity firm is buying Duluth-based Maurices.
OpCapita announced Monday it is picking up a majority stake in the women’s apparel retailer headquartered on Superior Street, ending 14 years of ownership by Ascena Retail Group.
“Duluth has been our home for 88 years, and we look forward to remaining a pillar of this great community for years to come,” Maurices CEO George Goldfarb said in a statement. “Our vision remains the same — we will continue to do what is best for our brand, our culture and our business. We will do that with new ownership who will bring us fresh perspectives, capabilities and focus.”
The $300 million sale is expected to close this summer. Goldfarb will stay on as CEO, while local employment levels are also expected to remain the same.
OpCapita, based in London and founded in 2006, is invested in several European businesses, not all of them retailers. It recently sold the German discount clothing giant NKD, which has 1,800 stores, after what OpCapita describes as a “successful turnaround.” The investment firm will be looking for a similar story at Maurices, its first investment in an American business.
“We believe there is a real opportunity to increase the profitability of Maurices through hands-on operational improvement,” CEO Henry Jackson said in a statement.
The former president of the Gap brand and a longtime leader at Old Navy, Jeff Kirwan, will be brought on as executive chairman to help boost sluggish sales.
“It is an honor to join Maurices upon the closing of the transaction as it embarks on this next phase of growth,” Kirwan said in a news release.
Kirwan left the company in February last year. Gap Inc. CEO Art Peck said at the time: “While I am pleased with our progress in brand health and product quality, we have not achieved the operational excellence and accelerated profit growth that we know is possible at Gap brand.”
But retail analyst Gabriella Santaniello told the News Tribune that Kirwan’s experience should translate well to the value-fashion market Maurices competes in.
“Everyone was expecting a Gap turnaround, but there were other issues there,” said Santaniello, founder of A Line Partners. “Jeff Kirwan had some key roles at Old Navy. I wouldn’t be surprised if there were some changes to bring Maurices into the future.”
E. Maurice Labovitz founded Maurices in 1931 in Duluth, and the Labovitz family sold to the Brenninkmeyer family’s American Retail Group in 1978. Dressbarn, which later changed its name to Ascena, bought Maurices in 2005.
Today the retailer focuses on small-town markets and competitive prices and employs about 360 people locally.
As with many legacy retailers, Maurices has seen stagnant sales over the past several years, and the brand has been shutting stores and shedding jobs since Ascena launched its “Change for Growth” corporate restructuring program several years ago.
In the middle of 2017, Maurices had 1,005 locations nationwide. At the beginning of February this year, there were 943 stores.
The retailer’s footprint will remain under review as Maurices maintains a “disciplined approach when managing the store portfolio,” according to a spokesman.
The sale will also keep Ascena as a minority shareholder, and the company will continue to provide services such as supply chain, tech support and other “back office functions.”
“As we establish Maurices as an independent standalone company, we welcome the continued support of Ascena through their retained stake and the range of services they will provide,” said OpCapita CEO Jackson.
Ascena, which will hold onto its other brands such as Dressbarn, LOFT, Ann Taylor and Justice, saw shares surge on Monday’s news. CEO David Jaffe said last month that Maurices and its fellow “Value” brand Dressbarn were “operating at unacceptable levels of profitability.”
Santaniello said the sale will give Maurices the chance to find its way without the daily demands of Wall Street.
“Investors are not very patient or forgiving. There’s always that pressure to immediately provide profitability, and you can end up in an unhealthy situation,” she said. “Now they can plan it out and be strategic. I think it’s going to be a much better situation.”
Goldfarb, who was not available for an interview Monday, said in a statement the sale is a “WIN-WIN-WIN-WIN … for us, for OpCapita, for Ascena and the great hometowns we serve.”