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J. McLaughlin Is Sold to Brentwood Associates

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Private equity firm Brentwood Partners has acquired J. McLaughlin with an aim to grow the business on several fronts.

NEW YORK  Private equity firm Bentwood Associates has acquired J. McLaughlin, a designer, marketer and multichannel retailer of laid-back, preppy sportswear, for an undisclosed amount, WWD has learned.

The retailer, which was founded in 1977 by brothers Jay and Kevin McLaughlin, has grown to 103 stores along the East Coast, Midwest, Texas and California. J. McLaughlin has a rapidly growing e-commerce business and is known for its unique store environments.

“We are extremely proud of what we have achieved in our 38-year history,” said Kevin McLaughlin, chief creative officer. “Brentwood has proven through prior investments to be a value-added partner and their experience in both the direct-to-consumer and retail channels will be a unique resource as we continue to grow our brand.”

Brentwood, a consumer-focused private equity firm with $1.4 billion of capital under management, has interests in Soft Surroundings, Sundance, Z Gallerie and Exhale spa, among other companies.

Kevin McLaughlin said in a phone interview that “this seemed like a good time to sell the company. The stars were aligned in general. Jay has become involved in Florida retail real estate and a restaurant. He has different priorities,” he said. “His kids are grown and out of the house. My son is in sixth grade. I’ll stay on in the same capacity.”

Steven Siegler, chief executive officer of J. McLaughlin, “would like to spend some time sailing,” McLaughlin said. “He’s looking at different things.” Siegler is staying on an interim basis to provide transition continuity.

“J. McLaughlin has done an excellent job of building an exceptionally loyal customer base,” said Steve Moore, a partner at Brentwood. “There’s a ton of white space nationally. There’s no question that we can more than double the existing store count.” Ultimately, Moore said he envisions between 250 and 300 stores in the U.S. “International is a possibility, but there’s so much domestic growth available.”

Moore said Brentwood will grow the company across all channels of distribution. In addition to increasing J. McLaughlin’s retail footprint, Brentwood will invest in the company’s direct marketing efforts, both online and offline.

Moore also said that J. McLaughlin has the potential to go public.

The retailer in November 2011 sold a majority stake in the business to a private equity group led by JH Partners and the Highland Consumer Fund. “We’ve had a nice relationship with JH and Highland for the last four years,” McLaughlin said. “We’ve grown nicely with them and doubled our store count in the four years we were together. JH Partners is switching its focus.”

McLaughlin said the company will expand its distribution geographically. “We have limited penetration,” he said. “We’ll have five stores in California with the opening of Palm Desert. We’re opening a store in Denver in the first quarter. We have more than 20 stores in Florida.

“A retailer in 2016 really has to look beyond the conventional ways of speaking to the customers,” he added.

McLaughlin said there’s an opportunity to enter new categories such as jewelry, swimwear, hats and sunglasses. “We haven’t scratched the surface,” he said. “Our strength has been more on the sportswear side. Accessories is wide open. We talked about doing beach shops and we haven’t touched jewelry yet.”