Frederick's Announces Merger With Publicly Traded Vendor
Frederick’s of Hollywood is on a growth spurt. On Dec. 19, America’s No. 2 retailer of women’s lingerie announced a merger with one of its vendors, Movie Star Inc., which has been traded on the American Stock Exchange.
The reverse merger with the privately held Frederick’s will help fund growth for 50 more stores in the next 36 months, according to Linda LoRe, the retailer’s chief executive.
“We have the goal to create a world-class organization,” LoRe said. The merger will create a new company, which will be called Frederick’s of Hollywood Group Inc. LoRe will continue to lead Frederick’s.
Melvyn Knigin, chief executive of Movie Star, will also separetely operate the New York–based lingerie manufacturer. LoRe and Knigin will both report to their company’s board of directors.
The new business will combine the latest financial results of the companies. Frederick’s earned $139 million in revenues for its 2006 fiscal year, which ended July 29, 2006.
Movie Star, which has been a Frederick’s vendor for the past decade, made revenues of approximately $51 million for its 2006 fiscal year, which ended June 30, 2006, according to a company statement.
Frederick’s profile has been rising on the lingerie market since LoRe helped guide the retailer to make a dramatic comeback from bankruptcy in 2002.
Since then, Frederick’s has maintained 136 retail stores, including a new flagship boutique in Los Angeles’ revitalized Hollywood neighborhood. The upcoming stores will take design cues from the Hollywood flagship. On Dec. 15, the company opened a boutique in the Westfield San Francisco Centre and plans to open a store in Las Vegas and two stores in Florida after April 2007.
The merger announcement takes place during a period of unprecedented popularity for lingerie. Americans spent $10.3 billion on intimate apparel from October 2005 to September 2006, according to marketing-research company NPD Group.
The Port Washington, N.Y.–based company said it was a 9 percent jump over the same period in the previous year. Many lingerie consumers have been going to Victoria’s Secret, a retail subsidiar y of Limited Brands, which maintains 1,000 stores and made more than $3 billion in 2006.
Frederick’s general merchandise manager, John Schulman, helped the company ride the wave of lingerie’s burgeoning popularity by introducing fashion-oriented collections.
However, the focus of the retailer will not move too far from its roots as a maker of risqueacute; lingerie in the 1940s, according to company spokesperson Jennifer Lowitz.
Every piece must have some sex appeal.
“We’re not trying to be everything to everyone,” Lowitz said.—Andrew Asch
