The investment group consists of Axar Capital Management, M-Cor Capital and MSP Sports Capital, along with majority owner Jason Rabin and group president Jarrod Kahn.
Centric Brands, a leading global lifestyle brand portfolio, has completed the sale of the company to chief executive officer Jason Rabin and a new investor group comprised of Axar Capital Management, M-Cor Capital LLC, MSP Sports Capital and Jarrod Kahn, Centric Brands group president.
As part of the transaction, Centric’s previous ownership group — Blackstone, Ares Management and HPS Investment Partners — will be concluding its ownership stake.
“Until now the company has been owned by Blackstone, Ares and HPS, three world-class private equity firms that have been with me since 2018. So they’ve supported the company 100 percent. They’ve been great partners. They’ve given everything I need to grow this business, everything strategic I wanted to do. They were supportive, but they’re private equity. Private equity is an investment, and after a point in time, it’s time. What’s next? So with me being an entrepreneur in this business, I wanted my company back,” Rabin said in an exclusive interview on Nov. 2 at company headquarters in New York.
Rabin said he approached friends and people he knew in the industry and said he was looking to buy back his business, and asked for their support. The deal closed Friday.
“I’m excited to work with an investor group to lead the company into its next phase,” Rabin said. “We’ll continue expanding our brand portfolio, deepening our global operational capabilities and delivering for our retail and licensing partners.”
Kahn added, “I’m looking forward to continuing to work with Jason as we drive toward his long-term global vision. We are incredibly optimistic about the future of Centric brands.” Kahn had previously been group president of accessories for Centric Brands.
Each of the new partners brings complementary expertise and new opportunities to Centric. Its management team will continue to lead the company, with Rabin remaining CEO. The company expects the new structure to support continued investment across its brand portfolio and global operations in the years ahead.
“We look for exceptional leadership teams with the infrastructure to win over the long term, and Centric has both,” said Jeff Moorad, CEO of MSP Sports Capital. “Jason and the Centric team have built a platform with the scale, strategy and operating discipline to keep growing across brands, categories and markets. We are proud to join them as partners, particularly as the company continues to grow on the sports side.”
Centric’s portfolio, which spans men’s, women’s and kids’ apparel, accessories and beauty, includes more than 100 licensed and owned brands, including Calvin Klein, Coach, Dockers, Faherty, Favorite Daughter, Gap, Joe’s Jeans, Michael Kors, Off-White, Quiksilver, Tommy Hilfiger, Ugg and Under Armour, among others, as well as entertainment brands including Disney, Marvel, Paramount and Universal. Operations span North America, Europe and Asia, with expertise across product design, sourcing, retail, stand-alone retail operations and digital commerce.
The company has expansive showrooms in the Empire State Building that resemble an upscale shopping mall, with each brand housed in its own distinct showroom reflecting its own personality. Company revenue is more than $3 billion.
Rabin said the management-led buyout “is not about the money.”
“This is about continuing to build a blue-chip company in this space. That’s all I’m focusing on, to build a company with quality and integrity, transparency and authenticity,” Rabin said.
Asked about Centric’s top priorities now, he said, “It’s to continue on the path.” He said his previous partners were great and gave him the capital. “They gave me the resources to do whatever I wanted to do. So it’s not like these investors are going to do things differently than the other investors. It’s really about us being focused on our strategic plan that we created a few years back.”
One of the initiatives a few years ago was to invest internationally, which remains a top priority. Centric started investing in Europe and now has offices in Milan, Amsterdam and London. It’s now moving into Asia, where it has more than 16 offices, mostly sourcing ones. “We’re going to start building wholesale and distribution offices there, so we can take brands and distribute them globally. We have so many brands, these are all global brands, and they want global partners,” he added.
Centric will continue to operate through its three-platform business model: Centric Powered, Centric Ventures and Centric Collective.
Centric Powered is the company’s operating engine, which runs the business end-to-end for brand owners, handling brand building, design, manufacturing, distribution, support and brand protection to drive scale. (This includes licensed brands such as Under Armour, Michael Kors, Coach, Kate Spade, Calvin Klein, Tommy Hilfiger, Timberland, Esprit and Ugg.) It is its biggest pillar.
Centric Ventures, its partnership platform, partners with founders to build and scale businesses, allowing them to focus on voice and vision while taking on financial support, operations and back-end infrastructure, from sourcing and supply chain to distribution, sales capabilities and new categories for brands including Favorite Daughter, John Elliott, Eastside Golf and Jennifer Fisher.
Centric Collective is the ownership engine, which acquires and manages brand IP, building long-term value for Avirex, Hudson Jeans and Robert Graham.
Rabin pointed out that Esprit, which Centric launched a year ago, “is unbelievable. It’s the fastest-growing one because it started from scratch.”
“What makes Centric amazing is that we have a portfolio of brands so not every brand every day is going to do great, right? Certain brands do better than other brands at different times. Sometimes a certain space is very popular and the brand in that space does well. We sell from Walmart to Neiman Marcus. The diversity of our portfolio makes us special,” Rabin said.
The company has stores for brands such as Favorite Daughter, John Elliott, Joe’s, Robert Graham and Jennifer Fisher.
AI is also an important aspect of the business. “We’re using it in a major way on the back end of the business. How do we streamline things? How do we move things quicker? We’re getting the information so much faster. So how do we use AI to become even more operationally efficient? We’re seeing a tremendous amount of [AI] success on the front in terms of design,” he said. The company have Centric IQ, which is its AI platform on which a visitor can ask any question about the company.
Rabin said it manufactures mostly throughout Asia, along with Central America and Mexico. The company doesn’t produce any footwear, except for slippers. “I’d rather focus on what we do,” he said.
“It’s really important today to pick and choose what brands are right for this company. Which brands potentially fill a white space for us, which brands could put us in different environments that we’re not in today? Like an outdoor brand. It’s not just taking on a brand that comes to us. We get calls every day. Hundreds of calls. It’s being picky. What brands we want to choose. What is the brand’s distribution? What’s the brand’s purpose?” he said.
If a brand is competitive with one of Centric’s existing ones, it would say no. “We’ve said no many times,” Rabin said.
In the entertainment category, it focuses on character licensing with exclusives with Disney for sleepwear, for example. It is also doing business with the sports leagues, such as the NBA and NHL, and is working with Amazon and sells to arenas.
Asked if Centric was impacted by the Saks Global bankruptcy, he said, “Yes, we were. They were partners with us. They helped us through it, but we definitely were impacted,” he said.
Centric’s brands that sell at the highest department store level would be “Off-White, which is doing amazing, Hervé Léger is doing great, John Elliott and Jennifer Fisher,” Rabin said. He said Centric is Fisher’s partner in her jewelry. Centric provides all the back-end financing, the manufacturing, the distribution, everything, and she works on the social media, marketing and product,” he said.
Centric manufactures kids, accessories, men’s and women’s products from high-end to low-end distribution as well as private label. It sells the off-price channel such as TJ Maxx, Ross and Burlington, the wholesale clubs, such as Sam’s Club, and Amazon. “I would find it hard to find a place that we don’t sell,” he said.
Rabin said what makes Centric different from the global brand management firms such as Authentic is that it doesn’t make any product. “When you’re a company like ours, which has so much diversity of all those channels, we’re going to get consistent deal flow from companies like them because they’re out buying every day. So we have that built-in growth from them acquiring brands. We have a huge amount of growth in our Centric Ventures and our Centric Collective,” he said.
As far as criteria for an acquisition, Rabin said, “If a brand could do well in men’s, women’s, kids, accessories, we feel instead of licensing the brand, we’d rather own the brand, or we can open up retail stores and build the brand internally and own the value as we create it,” Rabin said. An acquisition could be anywhere from $0 to $100 million in revenue. He said Authentic and the other global brand platforms look for larger deals. He said he has good relationships with all the brand management firms. “They’ve all been very good to us,” he said.
The staff remains the same following the acquisition. The company employs 2,600 people worldwide across 26 offices. “Everyone’s excited. We’re all energized. We built an amazing infrastructure with great, talented people and a great culture, and my goal is to continue on the same path,” Rabin said.
Rabin said he has a president for entertainment/sleepwear — think Disney pajamas — kids, accessories, lifestyle, men’s and women’s, and luxury, all of whom report to him.
Centric will continue to evolve its global sourcing operation after having invested more than $25 million, leveraging its scale to achieve cost efficiency and deliver the best product. The Centric Cares philanthropy platform has engaged the global team in a shared commitment to give back. The organization works with charities around the world and has donated more than 11,600 hours of volunteerism and millions of dollars in monetary and product donations.
Centric has invested in distribution centers totaling 2.7 million square feet across California and New Jersey and operates offices across North America (New York, Los Angeles, Greensboro, N.C., Montreal and Toronto); Europe (London, Amsterdam and Milan), and Asia.
Rabin, who is CEO and a member of the board of directors, has held both roles since the company’s founding in October 2018.
Asked if the game plan is to go public, Rabin said, “That’s not in the cards today.
“I think for a company like us, it’s great to be private. Because there’s so much opportunity and it’s the fashion industry, so things move around and change a lot. But right now, we’re happy where we are. We’re excited about taking this business back and creating such amazing things for the future.”
Centric was formerly known as the publicly traded Differential Brands Group, which was acquired by Global Brands Group Holding Ltd. in 2018. Following the purchase, the company rebranded as Centric Brands, with Rabin joining as CEO. He was formerly president for GBG’s North American division. In 2020, Centric, impacted by the pandemic, filed for Chapter 11 bankruptcy but emerged from the restructuring process the same year with new owners Blackstone, as majority sponsor, Ares Management and HPS Investment Partners. The restructuring enabled Centric to eliminate about $700 million in debt.
For the new deal, Jeffries LLC acted as exclusive financial adviser and Pryor Cashman LLP acted as legal counsel to management. Sidley Austin LLP served as legal counsel to Axar Capital Management, Gibson, Dunn & Crutcher LLP acted as legal counsel to M-Cor Capital LLC, (the investment arm of the Milken Family Office), and Morgan, Lewis & Bockius LLP served as legal counsel to MSP Sports Capital in connection with the transaction. Solomon Partners acted as financial adviser and Latham & Watkins LLP acted as legal counsel to the seller group in connection with the transaction.
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