WSJ: Carlyle-Owned Company Buys Linens ‘N Things Brand

Dec 13th, 2013

The Wall Street Journal, New York, NY, December 12, 2013 – The Linens ‘N Things brand, an e-commerce company reincarnated from a defunct housewares chain, is changing hands again.

A company owned by private-equity giant Carlyle Group LP has reached a deal to buy the Linens ‘N Things name from a group of liquidation and brand-turnaround specialists that purchased it out of bankruptcy proceedings several years ago, said people familiar with the matter.

The deal returns the name to private-equity circles after a stint under the watch of niche investment firms that buy defunct brands. Linens ‘N Things fell into bankruptcy in 2008 after Apollo Global Management LLC, another big private-equity firm that competes with Carlyle and others, led a buyout that saddled the retailer with debt it couldn’t handle in the recession.

The Carlyle-owned Galaxy Brand Holdings will pay more than $10 million for the Linens ‘N Things brand, one of the people said. The deal could be announced as soon as Monday.

A team of Hilco Global, Gordon Brothers Group LLC and Infinity Lifestyle Brands bought the brand out of bankruptcy proceedings in February 2009 for roughly $1 million after the retailer went out of business. They revived the name as an e-commerce website, and later struck a deal to sell a range of bed, bath and décor products under the brand at Home Outfitters stores in Canada. That deal is no longer in place, said a person familiar with the matter.

Galaxy has similar plans for Linens ‘N Things. There is an outside chance that it could open some brick-and-mortar stores under the brand, said a person familiar with the company’s discussions. For now, New York-based Galaxy is likely to continue selling products under the brand online and explore teaming up with other retailers to create Linens ‘N Things displays, an arrangement known in the industry as a “store within a store” concept, this person said.

Galaxy also is likely to sell bedding, kitchenware, utensils and other products branded with the Linens ‘N Things name, this person said. Founded in 2011, Galaxy has focused mostly on shoe brands, purchasing the And1 basketball-shoe brand and Avia and Nevados training and hiking brands, respectively. Galaxy says its brands generate about $700 million in annual sales. Carlyle, the big Washington-based buyout firm co-founded by David Rubenstein, has teamed with Galaxy on deals and in May became the company’s majority owner.

The Linens ‘N Things deal is the latest in a series of transactions, many involving Hilco and Gordon Brothers, in which well-known brands have been put to new uses after their parent company failed in the wake of the financial crisis and global recession of the past decade.

The Polaroid, Sharper Image and Circuit City brands were bought out of bankruptcy proceedings in the past several years. Hilco, Gordon Brothers, and Infinity were involved in the distressed purchase and turnaround of both the Polaroid and Sharper Image brands. In some cases, buyers used these once-venerable names to strike licensing deals or sell branded products online or in store displays.

Linens ‘N Things once boasted $2.7 billion in annual sales through hundreds of stores across the U.S. and Canada, the first of which opened in 1975. The retailer filed for bankruptcy protection in 2008, a couple of years after being saddled with more than $1 billion in debt in a takeover by Apollo and other buyout specialists. While the fund that invested in Linens ‘N Things performed well overall for Apollo, the retailer didn’t, and was eventually forced to liquidate, eliminating thousands of jobs.

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About Infinity Lifestyle Brands, LLC
Infinity Lifestyle Brands is the Infinity Group’s consumer products and brand management platform. The Company specializes in the acquisition and repositioning of mismanaged, underutilized or dormant consumer brands with high awareness value. Infinity offers its partners and investors a proven know-how in the reinvention of struggling consumer product companies and in the management and licensing of retail targeted product brands. The Company’s active ownership culture, product savvy and innovative thinking have also generated impressive results on many high profile, non-proprietary, brand transformations such as Starter Athletic, Bugle Boy, XOXO, Cannon Mills, Royal Velvet, Sharper Image, Polaroid, and Altec Lansing. Over the past 10 years, Infinity Lifestyle has led or has actively participated in brand repositioning ventures that have generated and distributed in excess of $650 million to its partners and investors.