Prada Sells Jil Sander to Private-Equity Fund

Prada Group NV is selling its Jil Sander brand to private-equity fund Change Capital Partners, ending years of management tumult and a lengthy search for a buyer for the minimalist German fashion label. 

The sale marks a retreat from Prada's multibrand strategy and will allow the Italian fashion house to focus on its star Prada brand and develop its younger Miu Miu label. Private-equity firms have been snapping up smaller labels that multibrand luxury-goods groups have put on the block after failing to turn them around. European luxury conglomerate Cie. Financiere Richemont last June sold men's clothing brand Hackett to Spanish investment firm Torreal. 

Change Capital, founded by Belgian entrepreneur Luc Vandevelde, former chairman of Marks & Spencer PLC and chairman of Carrefour SA, said it will keep the current design and management teams in place and will invest in the brand to develop new product areas. 

Prada declined to say how much Change Capital is paying for Jil Sander and said no bankers were involved in the deal. Change Capital, based in London, said it approached Prada about buying the brand in November. The private-equity firm said it acquired Jil Sander debt-free but said Prada requested that it not disclose the purchase price. According to an industry expert, the purchase price was 50 million euros to 60 million euros ($60 million to $71 million). 

The label should generate 140 million euros in sales and break even on an operational basis this year, Prada said in a statement. Between February and July of last year, the first half of Prada's financial year, Jil Sander posted a net loss of 9.7 million euros on 69.8 million euros in sales. Prada Group will publish its 2005 earnings in late spring. 

The sale comes nearly two years after Jil Sander began an extensive restructuring effort. In May of 2004, Prada hired Gian Giacomo Ferraris away from rival fashion company Gucci Group to become chief executive. 

In November of that year, designer Jil Sander resigned, leaving many to wonder whether the fashion house would survive without its founder's vision. Nonetheless, Belgian Raf Simons, who was hired in July and presented a collection in Milan this week, has received good reviews from retailers and the fashion media. 

Prada's relationship with Jil Sander was bumpy. Prada bought the company in 1999 as part of an acquisition spree during the late 1990s luxury-goods boom. Prada CEO Patrizio Bertelli soon ran into trouble, however, when Ms. Sander left abruptly after a few months because of clashes with Mr. Bertelli. Ms. Sander returned after 18 months, but the fashion house kept losing money. 

The financial troubles at Jil Sander were clouding success at Prada's main eponymous label. So, Mr. Bertelli last year moved Jil Sander and Helmut Lang, another unprofitable label, out of the group structure that includes the Prada and Miu Miu labels and put them on the block. 

In preparation for a sale, Prada has cut costs at Jil Sander by moving all of its operations and headquarters to Milan from Hamburg, Germany. Prada has built up the fashion house's accessories business, which is more profitable than ready-to-wear. 

Designer Helmut Lang left his eponymous brand early last year. Prada recently decided to discontinue the brand for now, with no new collections expected to arrive in stores after the current fall and winter line. 

Small labels like Jil Sander, which often have become lost in the muddle of large groups, should benefit from having a dedicated owner, said Bain & Co. luxury-goods consultant Claudia D'Arpizio. Other private investors that have snapped up smaller labels include Falic Group of the U.S., which last year bought Christian Lacroix from LVMH Moet Hennessy Louis Vuitton SA.Change Capital said it is considering seeking some licenses to boost the Jil Sander business and will look at franchising as a way to expand its store network.