Frame Denim has been on the hunt for an investor for more than a year, and industry contacts said talks are heating up.
The denim brand is said to be focusing its discussions with two private equity firms. The identities of the financial sponsors could not be immediately determined. A third potential investor was in the mix as well, but is now said to have gone in a different direction, according to one financial source.
A Frame spokeswoman did not respond to a request for comment by press time. Bankers at investment banking firm The Sage Group also declined comment.
Frame is believed to have hired Sage more than a year ago as it considered strategic options in connection with expansion plans, sources said.
Frame Denim was founded by Jens Grede and Erik Torstensson in 2012. The company splits its headquarters between Los Angeles and London, and the brand is believed to have reached the $130 million-plus range in annual volume in 2018. Retail volume is currently running more than double that amount, one individual said. The number of wholesale doors are said to be significant, and the brand’s website lists six freestanding stores. The stores are located in Greenwich, Conn.; Aspen, Colo.; New York City, N.Y.; Dallas, Tex., and in California, one each in San Francisco and Los Angeles.
Premium denim brands were once a hot favorite in the mergers and acquisitions world, but then fell somewhat out-of-favor as the athleisure trend became top-of-mind among consumers. For investors, that shift in the consumer lifestyle pushed interest in denim firms to the back burner over the last few years. It also made investors look more closely down the road and question both the potential for growth at the denim brands, and their own exit strategy.
Most successful denim brands have looked at expanding their lines to other categories for growth, such as tops and non-denim bottoms. In the case of premium denim brand Paige, it did both and also expanded into footwear last fall. For many of these brands, denim remains the core category and key revenue contributor to the bottom line.
Frame is no exception on the expansion front, although it may be more of an anomaly. Since the brand’s inception, it has evolved into a fashion house that produces four ready-to-wear collections a year. The company’s key advantage, then, is that it’s not just focused on denim. In fact, ready-to-wear is believed to be about half of the overall business, and there are plans to add footwear and accessories.
Those components make Frame a more interesting play for investors, giving it a lifestyle positioning that can better tick off the box on future growth potential, one lender said.