As of Thursday, October 5, 2017
Citizens of Humanity’s executive management team and private investors pooled their money together to buy back the portion of the company owned by private-equity investor Berkshire Partners and cofounder Jerome Dahan.
Dahan, who helped launch the Southern California blue jeans and apparel company in 2003, will stay on as a consultant while he works on his new denim label called Jean Atelier. The company will continue to be headed by Chief Executive Amy Williams, who was named to that position in 2015.
In addition, Karen Phelps was named creative director for the group of five brands that Citizens of Humanity creates from its headquarters in Huntington Beach, Calif., just south of downtown Los Angeles. Phelps previously was creative director for two of the company’s brands—Goldsign and Agolde, initially started with the help of Italian/American designer Adriano Goldschmid.
According to reports in the Business of Fashion, the idea to buy back the company came from Berkshire Partners, which had held the brand for 11 years after it made a sizeable investment in the company that some estimated to be about $250 million plus debt.
Last May, Dow Jones reported that Berkshire Partners, based in Boston, wanted to unload its portion of the denim company. Most private-equity companies prefer to keep their holdings for about four to five years, pump up the revenues and then sell them for a profit.
While Citizens is expected to see 10 percent revenue growth this year to about $100 million, that roughly equals the company’s revenues when Berkshire purchased its stake.
Citizens of Humanity’s revenues took a beating during the big recession of 2008-2009, declining steadily to about $75 million. The vertically-integrated company does all its production in the Los Angeles area. As the brand evolved, the company started to rely less on big department store business and branched out to high-end specialty boutiques whose customers can afford a blue jeans that costs between $180 and $238. But it still is a popular staple in stores such as Nordstrom and Neiman Marcus and is distributed in more than 35 countries including specialty boutiques such as 10 Corso Como, Joseph's, Club Monaco, Steven Alan, Trilogy and Anthropologie; online at Moda Operandi, The Dreslyn, Shopbop, Revolve, Need Supply and MyTheresa.com.
The company is hoping to expand all its brands, including Getting Back to Square One, Agolde and Goldsign. Two years ago, Citizens acquired Japanese denim label Fabric Brand & Co.
Citizens of Humanity was founded by Dahan and his business partner Michael Glasser after a long-court battle from a previous business venture. Dahan and Glasser founded 7 For All Mankind in 2000 with apparel maker Peter Koral. Within a few years, there was a falling out with Koral.
The three went to Los Angeles Superior Court after Dahan and Glasser accused Koral of taking 7 For All Mankind profits and using them to pay off his debts in his other apparel venture, L’Koral Industries.
A jury found in favor of Dahan and Glasser. Koral was ordered to pay his former partners $55 million, which they used to start Citizens of Humanity.
Koral eventually sold half of 7 For All Mankind to Bear Stearns Merchant Banking for $100 million. Several years later, VF Corp. purchased 7 For All Mankind for $775 million. Last year, 7 For All Mankind was sold to Israeli company Delta Galil.