(Filed Under Fashion News). After several quarters of losing wholesale revenue, Frederick‚Äôs of Hollywood Group is trying to sell this side of its business. The company has hired Avalon Group, an investment banking firm, to identify ‚Äústrategic alternatives‚ÄĚ for Movie Star, the wholesale division, which it merged with in 2008.
‚ÄúBy selling the wholesale division, we can focus more of our resources on strengthening our retail division and expanding into new product categories through strategic domestic and international licensing agreements for the Frederick‚Äôs of Hollywood brand,‚ÄĚ Thomas Lynch, chairman and C.E.O of Frederick‚Äôs of Hollywood, said. ‚ÄúConsidering Movie Star‚Äôs history, broad product lines and extensive customer list of retailers, we are confident in our ability to identify an appropriate buyer for the business.‚ÄĚ
The Moviestar division has been the primary driving force behind Frederick‚Äôs difficulty pulling in sales, according to the company‚Äôs recent financial reports. Despite a modest return to profit during the third quarter ended April 24, 2010, which the company reported in June, wholesale segment sales dropped 11.7 percent, accounting for 25.5 percent of the company‚Äôs 7.2 percent net sales decrease. During the most recent second quarter, wholesale sales plunged 67.7 percent, accounting for 86 percent of the company‚Äôs 21.3 percent sales decrease.
This news came after Frederick‚Äôs announced in August that it is outsourcing its remaining manufacturing facilities and consolidating its distribution facilities in a cost-cutting effort.
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