Oct 5, 2017
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Citizens of Humanity buys back company from private equity firm

Oct 5, 2017

Citizens of Humanity has finally bought back the portion of its company that was financed by Boston-based private equity firm Berkshire Partners, along with the brand's co-founder Jerome Dahan.

The fifteen-year-old LA-based denim brand has been assisted by Berkshire since the recession hit in 2006. It is estimated that Berkshire's investment is approximately $250 million plus debt. Berkshire should break even with the current transaction.

Normally when a brand involves a private equity firm, the bailout lasts no more than five years. That period of time is usually long enough for the private investor to see the business turn around and then profit from the sale. Berkshire has remained involved for over double that amount of time as Citizens' recovery has been slow.

Citizens is projected to earn $100 million in revenue this year. This would bring it back to a break even point for Berkshire's investment over a decade ago. During 2008 and 2009 in the depths of the recession, Citizens saw its revenue fall to $75 million annually. It is only now showing signs of recovery with a projection of ten percent growth for this year.

While premium denim arguably saw its bubble in the early 2000's, Citizens had to revisit its retail strategy. The brand continues to sell at department store partners including Nordstrom and Neiman Marcus, but it also had to expand distribution to smaller boutiques where consumers were more receptive to purchasing a $200 pair of jeans.

As part of the transfer, Citizens co-founder Jerome Dahan will stay involved in the brand as a consultant. Dahan is currently working on his new premium denim fashion crossover brand, Jeans Atelier which recently launched.

Citizens was originally founded by Dahan and his business partner Michael Glasser. Dahan and Glasser had founded 7 for All Mankind three years before with Peter Koral and then branched off on their own after disagreements with Koral. After a legal battle ensued, Koral was ordered by an LA court to pay Glasser and Dahan $55 million which the denim duo used to launch Citizens in 2003.

Citizens owns several brands including Getting Back to Square One, Agolde and Goldsign – both started with the help of denim icon Adriano Goldschmid –, and the Japanese label Fabric Brand & Co. Going forward, Citizens plans to expand these brands as well as its namesake label.

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