Oxford Industries Buys Southern Tide for $85 Million

southern tide
By Jean E. Palmieri. Source: WWD.

Oxford Industries Inc. is adding a feel-good member to its corporate family.

On Wednesday, the Atlanta-based manufacturer said it has acquired Southern Tide, a men’s sportswear brand known for its Skipjack polo, for $85 million.

In the remaining 41 weeks of fiscal 2016, Oxford expects Southern Tide to contribute about $35 million in sales, $7 million in operating income and 20 cents a share of earnings. These amounts exclude transaction expenses, integration costs and the impact of non-cash purchase accounting adjustments required under GAAP. The impact of these items may be significant, particularly in fiscal 2016. The company financed the acquisition with borrowings under its credit facility.

Thomas C. Chubb 3rd, chairman and chief executive officer of Oxford, told WWD that Southern Tide is “a great addition to our small collection of brands. All our brands are happy brands and this fits that mold.”

Oxford, which owns Tommy Bahama and Lilly Pulitzer, started working with Southern Tide in 2009 when the Greenville, S.C.-based label approached it as it was “struggling with product development, sourcing and production,” Chubb said. “And we were able to help them out a lot and get them into other categories to round out the business. As the brand matured, it became more self-sufficient, but we maintained our relationship and remained close to them.”

Chubb said Southern Tide “offers a well-differentiated and comprehensive collection of high-quality apparel and has a growing, multichannel distribution footprint. We believe this business is an excellent fit and expect our operating platform to facilitate continued growth.”

He said Christopher H. Heyn, chief executive officer of Southern Tide, will remain on board to run the brand, along with chief operating and chief financial officer Rob Iorio.

“They’ve got a good combo there and Chris has brought on some high-quality talent from Abercrombie & Fitch, Kate Spade and Vineyard Vines. He’s built a nice team and the team will remain intact on the front end. The business is still pretty small and it will benefit from being part of a larger company,” said Chubb.

Heyn said he was “very pleased to be joining the Oxford team and believe our business will continue to flourish under its guidance. Oxford has a deep appreciation for lifestyle branding and an excellent track record of growth with brands like ours. We look forward to much success in the future.”

Southern Tide remains primarily a men’s brand with a focus on sport shirts, swimwear, shorts and accessories that has become especially popular with specialty and department stores in the South. It also has a collegiate line for nearly 50 colleges and universities. It is carried in Nordstrom and Von Maur as well as in more than 850 specialty stores.

Southern Tide has begun expanding its women’s offering as well. “It’s a very small business for them,” Chubb said. “We know there’s a big opportunity there for them long-term, but we’re going to be patient. There’s still plenty of room for growth on the men’s side and we won’t push women’s too far or too fast.”

Brazos Private Equity Partners, a Dallas-based investment firm, bought Southern Tide in 2013.

“We could not be more pleased with the success of Southern Tide,” said Randall Fojtasek, cofounding partner and co-ceo of Brazos. “Our team was drawn to Southern Tide due to its focus on quality and innovative design and the potential for significant growth fueled by its enthusiastic customer base. Since our investment in 2013, the company has expanded its wholesale distribution channels, grown its e-commerce presence, invested in supply chain and logistics, and continued the development of its men’s and women’s lines. The management team’s talent, hard work and skillful execution allowed the company to capitalize on these growth opportunities.”

Southern Tide was founded by 23-year-old Allen Stephenson, who saw a need in the market for high-quality apparel with classic Southern style. His first product was the Skipjack polo that the company offered in bright colors. Stephenson now has no day-to-day involvement in the brand but remains an adviser to the business, Chubb said.

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