Proenza Schouler buys company back

In a major shakeup, Proenza Schouler founders Jack McCollough and Lazaro Hernandez have bought their company back from Castanea Partners with the help of an unidentified group of investors. Buying back their company also means that CEO Judd Crane and CFO John Paolicelli are out, and Kay Hong, known for turning companies around, will be taking over as CEO.

The buyback includes an injection of capital, though it has not been disclosed just how much money has been raised.

Hong was previously chief executive of plus-size fashion company Torrid, and prior to that she was managing director of global turnaround firm Alvarez & Marsal. Proenza Schouler is still staying afloat in a tough retail climate, but it has had to shut several stores, including its Upper East Side location, a long with four stores in Asia. As an independent label not backed by a luxury conglomerate like LVMH or Kering, Proenza Schouler has found a roadblock in scaling up its business.

Jack McCollough and Lazaro Hernandez buy back company

WWD once reported that Proenza Schouler's sales are estimated to be around 85 million, but according to Business of Fashion, someone familiar with its balance sheet said the business was smaller than that.

Proenza Schouler will be bringing other new people on board including Mary Wang, former head of global operations at Alexander Wang, as COO, and Jonathan Friedman will be stepping in as interim CFO. The company has also elected a new board of directors whose identities have not yet been disclosed.

In a joint statement, McCollough and Hernandez said that they "couldn't be happier" with the change in leadership, indicating that ownership would allow them to have "full authority over our company’s destiny."

As reported by Business of Fashion, from 2007 to 2011, Proenza Schouler was minority-owned by the Valentino Fashion Group, a part of Permira, a London-based mergers and acquisitions firm. In 2011, a group of private investors - including Rosen and Howard - bought out Permira. In 2015, Castanea acquired a minority stake, although the terms of the deals were not disclosed.

Proenza Schouler plans on using its new capital to expand globally. With the main Proenza Schouler line positioning the brand to compete in the luxury category, and its diffusion line PSWL helping it compete in the contemporary space, the brand is in a good place for a turnaround and expansion with its new business partners.

photo: courtesy of PR Newswire