Reigning Champ Acquisition: Key Details, Impact, and What Comes Next

Aritzia's acquisition of Reigning Champ marks a significant step in the apparel industry. By purchasing the premium athletic wear brand for $63 million, Aritzia aims to expand its product line into menswear. This strategic move leverages Reigning Champ's established market presence and Aritzia's robust infrastructure, promising growth and diversification for both companies.

What Is Reigning Champ?

Founded in 2007, Reigning Champ specializes in men's apparel and accessories, offering a range of products including hoodies, sweatshirts, T-shirts, and jackets. The brand differentiates itself with specialized collections for activities like tennis and golf, and iconic fabric lines such as Midweight Terry and Lightweight Cordura®. Collaborations with designers and brands like Junya Watanabe and Porter further set Reigning Champ apart, emphasizing high-quality materials and timeless design.

Who Acquired Reigning Champ?

Aritzia is a prominent women's fashion boutique known for offering a diverse range of high-quality clothing and accessories. Key products include dresses, denim, activewear, and seasonal collections. The company maintains a strong market position through regular updates on fashion trends and a focus on customer engagement via its mailing list and research community. Aritzia's commitment to accessibility and community involvement underscores its influential role in the women's fashion industry.

When Was Reigning Champ Acquired?

Aritzia announced its acquisition of Reigning Champ on June 16, 2021, with the deal expected to be finalized within the same month. This strategic move comes as Aritzia aims to capitalize on the growing market for men's athleisure, leveraging its strong start to fiscal 2022. The timing also aligns with broader industry trends of e-commerce growth and diversification, following a challenging year marked by the COVID-19 pandemic's impact on consumer behavior and business operations.

Why Was Reigning Champ Acquired?

• Market Expansion: Aritzia's acquisition of Reigning Champ marks a strategic entry into the menswear market. This move is expected to accelerate Aritzia's product expansion, leveraging Reigning Champ's established brand to tap into a new customer segment. Additionally, Aritzia plans to open new stores in various U.S. states, with 100 potential future locations identified, further broadening its market reach.
• Technology Integration: Aritzia benefits from Reigning Champ's integration by leveraging its own advanced operational systems and e-commerce platform. Aritzia's infrastructure, which has been hitting new highs in performance, is capable of supporting new initiatives, including the expansion into menswear. This integration aims to enhance Reigning Champ's market presence and operational efficiency.
• Competitive Advantage: The acquisition strengthens Aritzia's position against competitors by diversifying its product offerings and entering the men's premium athletic wear market. Leveraging Aritzia's established operational expertise and direct-to-consumer business model, the partnership aims to elevate Reigning Champ's brand. This strategic move is expected to create significant growth opportunities and enhance Aritzia's overall market position.

Acquisition Terms

• Acquisition Price: $63 million for 75% of Reigning Champ.
• Payment Method: The initial purchase will be funded with cash on hand. The remaining 25% equity interest held by Reigning Champ's management shareholders will be converted into Aritzia shares in up to three installments from 2024 to 2026.
• Key Conditions or Agreements:
  • The acquisition is expected to be completed in June 2021, subject to customary closing conditions and approvals.
  • Reigning Champ's senior leadership team will continue operating the business in partnership with Aritzia through a transition period of approximately five years.
  • Reigning Champ is expected to deliver approximately $25 million in revenue and $5 million in adjusted EBITDA in calendar 2021.

Impact on Reigning Champ

The acquisition of Reigning Champ by Aritzia has led to notable changes in operations and management. Aritzia now owns 75% of Reigning Champ, with the remaining 25% equity interest to be converted into Aritzia shares by 2026. Reigning Champ's senior leadership team, including Co-Founder and CEO Craig Atkinson, will continue to operate the business in partnership with Aritzia for approximately five years. This continuity ensures that the brand's core values and operational expertise remain intact while benefiting from Aritzia's robust infrastructure and market reach.

In terms of product offerings, the acquisition accelerates Aritzia's expansion into menswear, leveraging Reigning Champ's established reputation in premium athletic wear. Customers can expect an enhanced range of products and improved service quality due to the integration of Aritzia's advanced operational systems. While specific employee reactions are not detailed, the leadership's enthusiasm suggests a positive outlook. Customer reactions, though not explicitly mentioned, are likely favorable given the expanded product range and the brand's strong following. For founders considering business transitions, tools like Sunset can assist in managing such processes compliantly and efficiently.