The owners of German coffee-maker Tchibo, Wolfgang and Michael Herz, are getting in bed with Germany's largest women's luxury fashion brand Escada.
Can coffee turn around Esacada's flagging fortunes?
The Herz brothers have agreed with Escada to acquire a significant minority stake in the German fashion house, Escada said in a statement on Wednesday, June 25, stopping short of providing an actual figure.
Media reports have put the stake at 12 percent, citing sources close to the Herzs.
Bruno Saelzer, former CEO of Hugo Boss, is to become the new CEO of Escada, replacing Jean-Marc Loubier.
Earlier this month, Escada said it expected to post a loss in 2008 after the clothing market deteriorated, dragging sales at the company's BiBA chain lower in the second quarter. It was the second time the company lowered its annual forecast.
The market environment of the Escada Group has worsened once more over the last few weeks, in particular in the business-sensitive fast fashion segment of the Primera brands," the company said in a statement, referring to its mid-priced apriori, BiBA, cavita and Laurel labels.
To the rescue
"The board of directors is confident that the Herz brothers' financial commitment as well as the personnel changes will help stabilize Escada," said Claus Mingers, chairman of Escada's board of directors
The Herz brothers plan on buying shares in a planned 50 million euro ($78 million) capital increase at an issue price of 14 euros each, reported Bloomberg. Munich-based Escada closed up 2.4 percent at 14.70 euros in Frankfurt on Wednesday.
Escada also announced a new 90 million-euro credit facility, replacing an existing loan in the same amount.