Scotch & Soda Acquired by Bluestar Alliance
Bluestar Alliance, a New York-based brand management company, said Monday it has acquired Scotch & Soda, the Amsterdam-based men’s and women’s lifestyle brand.
Terms of the deal weren’t disclosed. The transaction is subject to customary closing conditions.
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Scotch & Soda operates 253 freestanding stores across Europe, North America, Asia, the Middle East, Africa and Australia, and is carried in 7,000 retailers worldwide and online. The company makes womenswear, menswear, kids’, denim, eyewear, fragrances and accessories.
Scotch & Soda filed for bankruptcy earlier this month in its home country of the Netherlands, citing “severe cash flow issues” due to a domino effect of the pandemic, war in Ukraine and inflation, as reported.
“We have been in touch with the company and their advisers for many months. The company was looking for the best outcome for the stakeholders and employees and was talking to many parties,” said Ralph Gindi, chief operating officer of Bluestar, told WWD.
The acquisition by Bluestar Alliance, whose brands include Hurley, Bebe and Tahari, among others, will allow for the continuation of the brand and its products across key markets, including the Netherlands. Bluestar has retail sales exceeding $6 billion, and manages a portfolio of more than 300 licenses and a retail platform of more than 100 stores worldwide.
Joseph Gabbay, chief executive officer of Bluestar, said, “Bluestar continues to strategically build its portfolio and we see Scotch & Soda as a unique fit, widely known for its roots in Amsterdam and celebrating self-expression with a modern twist on timeless fashion pieces.”
Gindi added, “Scotch & Soda is a chic, contemporary lifestyle brand which embodies the free spirit of Amsterdam and is uniquely recognized by consumers everywhere in the world. The niche brand sits on its own and attracts a younger fashion-conscious consumer who appreciates fine craftsmanship and attention to detail. Our goal is to continue Scotch & Soda’s luxury retail distribution strategy, while also introducing the brand to more trendsetters, especially those looking to express their personality through their clothing.”
Gindi noted that they’ve been eyeing Scotch & Soda for a long time.
“Scotch & Soda has been on out radar for many years. We have been tracking strong men’s brands and Scotch & Soda has always been at the top. But in addition to men’s, the children’s under Scotch & Soda and the women’s are top performing brands within their competitive landscape. My entire family wears the brand,” said Gindi. What appealed to him was that Scotch & Soda is a “clean, well-kept luxury brand.”
“It was just waiting for a team to show it the love and affection the brand deserves,” he said.
According to Gindi, the Netherlands was part of the bankruptcy, not the U.S. He said Bluestar is not in control of the process, “but it is limited to certain European territories.”
Following the closing of the transaction, which is expected to take place in coming weeks, Scotch & Soda will be enabled to continue its activities in selected markets. Gindi said the plan is to build and rebuild the teams in the U.S. and Europe. “There is a very strong international franchisee and distributor in place which we hope to adopt,” he said.
He said the strategy is to stabilize the existing fleet of stores before they expand. They will look at China, but are not ready to commit yet. “Some stores will close around the world unfortunately. It’s the unprofitable stores that will surely go,” said Gindi.
As for changes he’d like to make, Gindi said, “The collection was limited to what was developed for the European markets, and we would like to tailor some of the collections to their local markets in territories such as USA and China. The men’s denim and chinos are amazing, and we will put significant marketing behind those categories to share the message. On the women’s side, the women’s sweaters and dresses are amazing, and we will do the same. We will expand the shoes, outerwear and swimwear to round out the lifestyle of the brand.”
Fifty percent of the business is men’s wear, 30 percent is women’s wear, 10 percent is kids’ and 10 percent accessories.
When asked what his strategy is to get Scotch & Soda healthy again, Gindi said, “Streamline the businesses, institute our licensing and franchisee model, lean on the existing design team to keep the DNA and grow the brand.”
Gindi noted that there were many countries that were extremely profitable. “They expanded too quickly in a very short amount of time. The company could not handle the growth and the capex [capital expenditure] in such a short window of expansion,” said Gindi.
Gindi said they will be sticking with the existing management team and will be making some announcements over the next few weeks. While they will have a U.S. office, the Netherlands will continue to be a key hub for the brand.
Japser Berkenbosch, attorney at Jones Day and trustee of the bankruptcy entities, said, “We are happy that we were able to make this announcement following the bankruptcy. We have seen quite some interest from parties to acquire some of the bankrupt entities. The proposal of Bluestar Alliance was by far the best deal for all stakeholders involved.”
Erik Schuurs, co-trustee, added, “This is good news for quite a large group of employees at Scotch & Soda, even if, unfortunately, not all employees can be kept on board. Scotch & Soda is a great brand, and I’m glad to see that it can prosper under the management of a company with a great track record.”
As reported last week, managing director Frederik Lukoff decided to step down following the bankruptcy filing, announced March 20, and not continue with the new owners. Berkenbosch was appointed to replace Scotch & Soda’s board in the management of the bankruptcy in the Netherlands. He had joined the company in 2019 after a decade as president of Stella McCartney.
Scotch & Soda generated record revenues of 342.5 million euros for the 2022 fiscal year, but said the previous two years of pandemic restrictions “affected its business performance and financial health negatively.” Store closures in the Netherlands over the holiday period of December 2021 and January 2022 were “particularly damaging,” it said. The war in the Ukraine and the subsequent energy crisis also became obstacles.
Scotch & Soda said it had been struggling since June 2022, and private equity investor Sun European Partners, which took a stake in the label in 2011, was no longer willing to prop up the company with additional cash. After months of seeking additional financing, Scotch & Soda brought in consultants Teneo earlier this year to find a buyer.
Last December, Scotch & Soda said it signed a licensing agreement with Bos Group to take over its footwear design, production and distribution.
Outside of the Netherlands, Scotch & Soda has been expanding rapidly, opening 36 new stores around the world in 2022, including flagships in London and Milan, and in U.S. markets such as Washington, D.C., Detroit, San Antonio, Texas, and Scottsdale, Arizona. The openings brought its North American total to 50, with 46 stores in the U.S. and four in Canada.
The brand opened its first store in China in December 2021 and rolled out four additional stores, including Beijing and Shanghai in 2022.
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