Luxury Datapoint of the Day

Back in 2005, the luxury segment was booming, but Prada didn’t really know what to do with its loss-making Jil Sander franchise. So it took advantage of the overheated market and sold it, for €50 million, to private-equity shop Change Capital.

Change Capital injected some common sense into Jil Sander, moving its flagship stores to cheaper locations, and got the brand into the black (if you ignore debt service): it had ebitda of €6.1 million in 2007. And amazingly, given the credit crunch and the strong euro, the market has become even more overheated: the brand is now being sold to Japan’s Onward for €167 million, plus €43 million to pay down debt, for a total enterprise value of €210 million. Or 34 times ebitda.

The interesting thing is that the sale of Jil Sander is emphatically not a play on the growing commodity-fueled nouveau riche in Russia or the Middle East. The brand specializes in the understated: you have to look really close to work out that that black tote bag is actually made of snakeskin and retails for $2,675. (To make it even more unassuming, the modest "Jil Sander" label is designed to be removed very easily.)

The other aspect of the sale worth noting is that the big jump in the value of the brand took place after Jil Sander herself resigned from the company for the second and final time. Jil Sander the company struggled when it was overseen by Jil Sander the woman; today, it has managed to carve out a luxury niche for itself unencumbered by what used to be known as key man risk. Yes, Raf Simons is doing a magnificent job — but if he were to leave for whatever reason, the formula has now largely been perfected.

Onward’s task now is to find a balance between Jil Sander’s hugely valuable exclusivity, on the one hand, and making money off widely-available perfumes and accessories, on the other. If it can be done, maybe even this eye-popping price will turn out to be a good investment.

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