Justin Bieber, Madonna and Kim Kardashian-West tweeted about the launch of EDbyEllen.com.
The company may sell Movie Star, which manufactures and distributes women’s intimate apparel.
Just about a month after using its intellectual property, including its web site, as partial collateral to secure a $7 million loan for operating capital, Frederick’s of Hollywood Group Inc. is looking at strategic alternatives for its wholesale business.
Fredericks, a manufacturer and multichannel retailer of intimate apparel and No. 251 in the Internet Retailer Top 500 Guide, last week retained New York investment banking firm Avalon Group Ltd. to help evaluate a possible sale and other strategic alternatives for Movie Star, the company’s wholesale division that designs, manufactures and distributes women’s intimate apparel to other retail chains and direct marketers.
“We have chosen to seek alternatives for the Movie Star wholesale business as we concentrate on building Frederick’s of Hollywood into a global lifestyle brand,” says CEO Thomas Lynch. “By selling the wholesale division, we can focus more of our resources on strengthening our retail division and expanding into new product categories through strategic domestic and international licensing agreements for the Frederick’s of Hollywood brand.”
For the third quarter of fiscal 2010 ended April 24, revenue for Frederick’s wholesale business:
- Declined 15.6% to $6.5 million from $7.7 million.
- Year-to-date wholesale revenue declined 42.9% to $17.2 million from $30.1 million in the first three quarters of 2009.
- Total sales for the third quarter decreased 7.3% to $43.4 million and year-to-date sales fell 14% to $121.9 million. The company doesn’t break out quarterly web sales.
The decision to explore a sale of its wholesale business comes after Frederick’s in August completed outsourcing its manufacturing capacity to various outside parties and consolidated all of its distribution, customer contact and information technology operations into its distribution center in Phoenix. The consolidation will generate about $2 million in annual savings, the company says.
Also in August, Frederick’s used its intellectual property, including Fredericks.com, as part of the collateral to secure a $7 million loan from Hilco Brands LLC, an affiliate of Hilco Consumer Capital LLC, and Infinity FS Finance I LLC, to repay a $2 million bridge loan and use as working capital. “The rich and long history of the iconic Frederick’s of Hollywood brand combined with our ability to recognize value in the intellectual property and the company’s multichannel distribution, including retail, catalog, e-commerce, wholesale, and licensing, made this investment an attractive opportunity for us,” says Hilco Consumer CEO Mitchell C. Berk.