LA Denim Maker, Joe's Jeans, Inc. has announced a stock purchase agreement with Hudson Clothing Holdings, Inc. that will aquire the privately held Hudson for $97.6 Million. Here's why.The publicly traded Joe's Jeans, Inc. has quickly become a dominant player in the global Denim market since it's founding in 2001. With premium denim offerings for men, women, and children, Joe's has been rapidly growing through their presence within international retailers and its 30 company-owned boutiques in the US.
Why the acquisition?
This news comes just one day after Joe's Jeans reported a 17% decline in profits from Q2 of last year. The company stated shrinking product margins and rising input costs as the reasons for the decrease in profit margin.
Joe's Jeans acquisition of Hudson Clothing is very strategic as Hudson offers many complementary benefits to the company. The two companies expect to experience significant supply chain benefits that'll translate into cost savings, reduction of raw material input costs, and driving sales by building on the unique strengths of each company’s distribution networks.
Marc Crossman, President and CEO of Joe's Jeans, Inc. said, "Once the acquisition is complete, we expect to nearly double the size of our business, meaningfully increase our international and e-commerce penetration, and enhance our overall prospects for growth."
A Major Supply Chain Investment
Joe's Jean's is making a very significant long-term investment into their supply chain by acquiring Hudson Clothing. One that will likely pay off big time, as the two companies are engaged in a very similar business model of selling through eCommerce platforms, boutiques, major international retailers, and company-owned boutiques for Joe's Jeans in select locations.
Their convergence of supply chains will afford them cost savings throughout their businesses with bringing together production efforts, extensive economies of scale, shipment consolidation, and more selling opportunities to retailers.
As raw material prices and labor costs are on the rise in global manufacturing regions, more and more Apparel Brands are making meaningful investments into their supply chains to boost efficiency, scalability, and agility. The long-term benefits are huge for brands that are creating sustainable supply chains that can weather the changing apparel industry landscape.
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Source: Joe's Jeans