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PE-backed RG Barry ponders exit when market stabilizes

Illustration of a pair of sneakers with a dollar sign insignia

Illustration: Sarah Grillo/Axios

Footwear company RG Barry will likely exit to another set of financial sponsors once the M&A market stabilizes, CEO Robert Mullaney tells Axios exclusively.

Why it matters: Industry executives continue waiting for an opening in the market to put the dry powder on the sidelines to work.

Details: "There's always room for capital investors," given Blackstone and Mill Road Capital-backed RG Barry's ambitions, Mullaney says.

  • While Mullaney declined to elaborate on timing, he said there are theories out there now that indicate M&A will improve in the second half of this year, with "clear skies" in 2024.
  • While a public offering is in RG Barry's future, it is not a near-term option and is likely something for the next set of owners to contemplate, he says.

Between the lines: Mullaney says he took the top job in 2018 because of the potential of the foundation and what he described as underappreciated brands.

  • One of the first challenges he tackled was manufacturing waste to cut costs.
  • The other aim was to transform RG Barry into an e-commerce-centric business.

By the numbers: The company, parent of accessories brand Baggallini and slippers brand Dearfoams, generates between $250 million and $500 million today, Mullaney said.

  • Over the past five years the company has had a 15% compound annual growth rate (CAGR) and doubled its revenue, he says.
  • Mullaney projects the company will be four times the size it is today in 2030.
  • Most of that will come from organic growth, but a portion will come from M&A, he says.

What's next: RG Barry is eyeing buys of strongly recognized brands that need modernizing and could benefit from its digital platform.

  • Mullaney will be bargain hunting over the next 12 months in areas such as casual comfort footwear as well as bags, sleepwear and loungewear.
  • The Dearfoams brand is also launching a line of comfort footwear.
  • The company is planning to launch an initiative in partnership with other retailers on end-of-life products.

Flashback: Blackstone and Mill Road took publicly traded RG Barry private in 2014 for about $215 million, according to reports.

  • Per the announcement at that time, it was approximately 50%-owned by Mill Road Capital, 48%-owned by Blackstone, and 2%-owned by a consortium of institutional investors.

Of note: While the company has not yet formally rebranded, the acronym RGB has a dual meaning, also standing for Responsible Growth Brands, Mullaney says.

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