SMCP, the group behind French fashion brands Sandro, Maje and Claudie Pierlot, has been put on the market in a deal expected to happen next year that could value it at more than one billion euros ($1.14 billion), sources close to the matter said.
Private equity firm KKR (KKR.N), the controlling shareholder, has hired Bank of America Merrill Lynch and UBS to review options that could include a flotation on the Paris stock market in 2016, they said.
“The word is out that they will get this business sold next year,” said one person close to the matter.
KKR, SMCP, BoA Merrill Lynch and UBS declined comment.
“Nothing has been decided yet,” another source said about a possible flotation, adding that KKR was also putting out feelers among potential financial or trade buyers to gauge appetite.
KKR could put a valuation of more than one billion euros on the company, based on twice annual sales.
“I think they are trying to get at least two times sales,” one of the sources said.
Last year, sales reached 509 million euros. In the first half, sales rose 32 percent or 8.9 percent on a like-for-like basis, stripping out contributions from new stores.
KKR acquired a more than 60 percent stake in SMCP in 2013 in a deal that valued it at around 650 million euros. Back then, the business made 422 million euros in annual sales and drew interest from many private equity firms as it was regarded as a rare asset due to its relatively large size.
Maje, Sandro and Claudie Pierlot, which sell 200-euro dresses, operate in the “accessible luxury” segment of the market which has been benefiting from buoyant demand among fast-growing middle classes, particularly in countries such as China.
SMCP Chief Executive Daniel Lalonde told Reuters in an interview last week that the company had attractive growth potential, with ambitious plans to expand in China as well as in several European countries such as Britain and Italy.
Lalonde, who joined the company last year after more than a decade at LVMH (LVMH.PA) and two years at Ralph Lauren (RL.N), would not be drawn on KKR’s plans to sell the business.
SMCP’s comparable revenue in France – which represents around half of total sales, down from 65 percent in 2013 – rose 5.9 percent in the first half while the ready-to-wear market had been slightly flat to declining in recent years.
Lalonde said the company had enjoyed annual sales growth of more than 20 percent in recent years and opened around 120 stores a year with no plans to slow down. In the past 18 months, it had entered China, Russia and the Middle East.
Lalonde said SMCP was able to react fast to changing consumer and fashion trends thanks to supply chain practices borrowed from Hennes & Mauritz (HMb.ST) and Zara (ITX.MC).