Hello-Hello, what a delightful Wednesday it is here at The Prepatorium, albeit it a little harried.
We shift directions today in light of yesterday’s big announcement that Lilly Pulitzer has been sold to Oxford Industries.
We have had a few queries on the topic, and thought it best to look at this development rather than engaging in
our usual blather and drivel our planned post more relative to seasonal goings-on.
Back to the deal: Oxford was prepared, posting a link on its home page to “a retrospective look at the Lilly Pulitzer brand” via a You Tube video.
The clip offers a nice look back at Lilly history, including images of patterns and prints, iconic designs and celebrities in Lilly.
Oxford also co-hosted a conference call with Lilly’s management team to share details about the sale and what it portends for the future.
First a bit of background on Oxford. The company owns Tommy Bahama…
And Ben Sherman.
Here is how the Times’ Dealbook described the purchase:
“In the world of deal-making, prep is still in, and pink is looking awfully pretty.
“One month after J. Crew agreed to sell itself to two buyout firms, the parent company of Lilly Pulitzer — the maker of eye-catching dresses for the horsey set — sold itself on Tuesday to Oxford Industries for $60 million in cash.
And this from Michael de la Merced’s Dealbook story about on Lilly’s place on Planet Prep:
“No less an authority than “The Official Preppy Handbook” declared that the company’s golf skirt and beach dress were must-haves for Muffie and her friends.”
What does it all mean to us, the consumers? Here is what Lilly noted on its Facebook page:
“Good news travels fast! Here’s the juice…Sugartown Worldwide (the parent company of Lilly Pulitzer) was acquired by Oxford Industries. We are smiling ear to ear because everything will stay the same, only better. The company will be under the same leadership – aka Brad and Scott and everyone else here you adore. We are… in love with Oxford because they LOVE Lilly and want us to be JUST AS WE ARE, only more more more.”
From a WWD story on the acquisition:
“…the plan is to add to the Lilly Pulitzer stable of company-owned retail stores and enhance its e-commerce site, which launched two years ago and accounts for more than 10 percent of sales. E-commerce is viewed as “the biggest opportunity,”…”
Jean Palmieri’s story in WWD notes Oxford plans to add 4 to 7 new stores a year to the existing 16 corporate stores. This may be good news in many respects, but there is significant anxiety from non-corporate stores, as all Tommy Bahama stores are owned by Oxford.
A few thoughts:
- When a company is publicly traded there are different goals. Shareholders have profit expectations, and those expectations must be met. Having worked for both privately held and publicly traded media companies over the years, there *is* a difference. By the same token, Lilly Pulitzer is already engaged in making money, it hasn’t ever been a not-for-profit endeavor. However, an additional $20 million dollars is on the table if Lilly meets certain earnings targets. It doesn’t take an MBA to recognize that amount of money can be a strong motivator in finding ways to meet such goals.
- The current management team will remain at the Pink Palace. Scott Beaumont and Jim Bradbeer, (CEO & President, respectively) brought the brand back from the grave and have demonstrated they know their stuff, we admire their business acumen. Those two gentlemen are very savvy marketers.
- The Lilly Warehouse sales will remain in KOP (King of Prussia, home to the Lilly Mothership).
How will Oxford/Lilly react to customer concerns about quality, direction, and brand dilution? That is an unknown. Lilly Pulitzer has an extraordinarily passionate customer base, not quite on par with Apple (but close), with a devoted, almost-cult-like following. Consumers know prints by name, specific garments by cut and style: the Bowen dress, Paley Cardigan, McKims sandals, and recently, the wildly popular Murfee scarf, to name just a few of the items buyers covet. (Yes, we have a few favorites as well!) The Re-Lilly Facebook group has grown to more than 2700 fans in just one year, followers who buy, sell, swap and share Lilly merchandise, tips and tidbits.
Some believe Lilly is no longer as “special” as it once was. Messrs. Bradbeer and Beaumont have done a stellar job bringing the brand back from the grave, to be sure. But recent collaborations have troubled some customers, the LeSportSac partnership seemed especially irksome to many, although it didn’t bother us.
The company has licensed or partnered with firms making everything from electric cars to cosmetics to stationery. (Full disclosure: we are sellers of the Lilly Pulitzer Stationery & Gifts line.) The enormous Lilly Pulitzer Furniture Collection due out in the spring has sparked conversation as well. (More info and photos here.) One area greeting the news favorably: the stock market, Oxford shares were up 22% as of this writing.
As Lilly’s executives noted on the conference call, they were not actively shopping the company, having declined previous approaches over the years. In this case conversations continued past the initial stage, and the offer transcended others in providing a solid “strategic and cultural fit,” according to Thomas Caldecot Chubb, III, Oxford’s president.
As with any transaction of this magnitude many factors are unknown. From a selfish perspective, we do love our Lilly, although we don’t live in it, in part because of the climate – The Great Midwest doesn’t encourage summer fashions year round. Sigh. And we want to see the small, independent shops we love (hello Village Palm and many others!) continue to grow and thrive. So we’ll cross our fingers and our toes, hoping that good things happen going forward.
More importantly, what do *you* think?