Prada sells Jil Sander to Change Capital

Prada has sold loss-making luxury label Jil Sander to British private equity group Change Capital Partners for an undisclosed sum, the two sides said, closing a deal that has long been expected for the Italian fashion group.

The sale marks another move by private investors into the fashion world, which came to be dominated by giant multi-brand players like LVMH and Gucci in the 1990s. Many of those have recently sold off smaller labels which they have struggled to turn into profit.

"Prada has a done a very good job turning the brand around, but multi-brands have to focus on core labels. Many of them find it difficult to manage several similar brands or brands with similar space," Change Capital's Stephan Lobmeyr told Reuters.

"Someone who focuses on a brand like Jil Sander can get much more out of it."

Lobmeyr, who said Change Capital approached Prada last year, added his group would work on holes in the brand's distribution in emerging markets and elsewhere, and extend its range of products including accessories, which make the highest margins for luxury groups.

Jil Sander is Change Capital's first luxury purchase.

Prada has for months been reported to be in talks to sell the German fashion house, known for its supersleek lines and minimalist, monochromatic palette. Rumours have mushroomed since Jil Sander herself quit in November 2004, after a spat with Prada over strategy.

Prada initially handed stylistic direction to a team who worked under the German designer, but appointed Belgian Raf Simons last May to head up the Jil Sander label's creative team.

Former industrial designer Simons, specialised in menswear, made his womenswear debut on Monday, the first day of the Milan Fashion Week, with a collection that was in tune with the label's structured tailoring and simple chic.

"Raf Simons has had fantastic feedback from his first shows. Prada found the person that coincides with the brand's positioning," Lobmeyr said, adding Change Capital would respect Hamburg-based Jil Sander's brand identity and values.

Jil Sander, which last year launched a restructuring plan, is on track to reach operating break-even in 2006, with total revenues expected to exceed 140 million euros ($166.6 million).

Prada had bought the label in 1999, but Sander left a few months later following a spat with Prada boss Patrizio Bertelli. She was lured back, only to quit for good 18 months later.

Prada's accounts in 2004 were dragged into a loss by Jil Sander and fellow German label Helmut Lang, which Prada has also said it could consider selling.

Prada has said it wants to focus on its core Prada label and younger line Miu Miu, which make up some 85 percent of sales.

Change Capital, founded by Carrefour Chairman and former Marks & Spencer executive Luc Vandevelde in 2003, is specialised in retail and branded goods.