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David’s Bridal, the biggest wedding dress retailer in North America, is being acquired by private equity firm Clayton Dubilier & Rice in a deal valued at $1.05bn.
Robert Huth, chief executive of David’s Bridal, said the company saw revenues and same-store sales grow in the high single-digits in both 2010 and 2011. “David’s is a very profitable company with a good growth path ahead of it,” he said.
CD&R will be the latest in a string of owners of David’s Bridal, which was founded in 1950 in Florida. The company went public in 1999, only to be acquired by May Department Stores a year later for $436m. May merged with Federated Department Stores in 2005, which became Macy’s in 2007.
As part of Federated’s merger with Macy’s, it sold David’s Bridal to a consortium led by Leonard Green & Partners for about $750m. TPG was a minority investor in that deal.
Mr Huth said Leonard Green was looking to pay out investors in one of its earlier funds, which David’s Bridal was a part of, and “opted to sell” because “they got a price they found attractive”.
The average American wedding costs nearly $30,000, according to TheKnot.com and WeddingChannel.com, with brides spending an average of $1,100 on their dress.
David’s Bridal claims to dress one-third of all US brides at its 300 stores. Offerings range from the $1,500 “mermaid” gown with a dramatic organza skirts to the $100 chiffon maternity gowns with a beaded neckline.
But the wedding industry suffered during the recession, Mr Huth said, with total weddings down by nearly 100,000 a year. This disproportionately impacted sales to the “moderate budget bride” who spends less than $600 on her dress, he said.
The downturn prompted David’s Bridal to go in search of more affluent customers, leading to the company’s 2010 partnership with Vera Wang, the high-end wedding dress designer. “We had to reposition the business to reach higher,” he said.
“David’s Bridal is a unique and well-positioned speciality retailer competing in a large and stable industry,” said Richard Schnall, a partner at CD&R. “We look forward to working closely with the company to build on its market leadership and scale advantages to grow in new market segments, channels and geographies.”
Mr Huth will remain chief executive. CD&R operating partner Paul Pressler, a former chief executive of the Gap, will become chairman of David’s Bridal at the close of the transaction, which is expected in the fourth quarter.
Bank of America and Barclays advised David’s Bridal.