Billy Reid is about to get a much bigger retail footprint.
The designer’s parent company, Billy Reid Inc., has acquired the direct-to-consumer arm of AI-powered, made-to-measure company Knot Standard. Terms were not disclosed but Knot Standard will become a minority shareholder in the combined business that will operate under the Billy Reid name.
Although the deal seems a bit unorthodox at first glance, drill down deeper and it makes more sense. As Jeff Zens, chief executive officer of Billy Reid, explained: “We had a made-to-measure business before COVID that was successful commercially, but it was operationally difficult and we shut it down. We were looking to get back in and was introduced to Knot Standard as a service adviser.”
The two made a deal and Knot Standard is creating made-to-measure menswear at the Billy Reid store in Charleston, S.C. The plan is to roll out the service to about half of the fleet over the next several months. Billy Reid currently has 12 stores, including one that opened last month on Abbot Kinney in Venice, Calif.
At the same time, Zens explained, in the back half of last year he was exploring options to raise capital to open stores and accelerate growth at the Billy Reid brand, and one of the potential investors was Provenance, a growth equity investment firm based in Los Angeles that had purchased a minority interest in Knot Standard in 2018.
Matthew Mueller, CEO of Knot Standard, said the tech side of his business had really taken off since the end of the pandemic and “we were working with Provenance to see how to split the two.” The options were to spin off the retail and run it independently or find another way to grow.
Enter Billy Reid. It didn’t hurt that Zens and Anthony Choe, founder of Provenance, went to college together so they started to brainstorm about how to work together, Mueller explained. One thing led to another and the deal was struck.
As a result of the acquisition, Billy Reid will take over the eight Knot Standard retail stores in New York; Chicago; Los Angeles; San Francisco; Washington, D.C.; Houston; Dallas, and Austin, Tex., as well as the company’s online business. Ready-to-wear will be added to all these stores for the first time.
Knot Standard will continue to operate the technology part of its business, which provides made-to-measure services to retailers including Nordstrom, Bloomingdale’s and Brooks Brothers.
Zens said the intention is to “rebrand” the business over the next several months to Billy Reid, most likely without the Knot Standard name.
“We were initially attracted to the product quality, similar customer and unique business model, all of which complement the Billy Reid business and will create a stronger consumer offering than each brand could have achieved alone,” Zens said. “This deal creates a bigger, more profitable company and also gets us to San Francisco and L.A. It expands our geographical reach and cross-pollinates their customers and ours.”
As part of the deal, the retail employees of Knot Standard will remain with the company and Mueller will join the Billy Reid board.
The Alabama-based Billy Reid has experienced a number of ups and downs since launching his first brand in March 1998 in New York under the William Reid name. When sales plummeted after the Sept. 11, 2001, terrorist attacks, he closed the label and moved back to his home state of Alabama to do some soul searching. He relaunched in 2004 as Billy Reid and has won three Council of Fashion Designers of America awards, one of only four designers to have achieved that honor, and is known for his textiles and his Southern-skewed aesthetic.
In 2018, Reid sold a minority stake in his business to Joel Anderson, an Alabama businessman and the Kemmons Wilson Companies, a Memphis-based investment firm operated by the descendants of the founders of the Holiday Inn chain. However, Anderson died during the pandemic, Zens said, and Kemmons Wilson upped its investment to become the majority owner.
“It’s been quite an interesting ride,” Reid said. “Joel and I were close and we went through a lot of ups and downs but we’re fortunate to have the Wilsons support us. They were customers first and they’re in it for the long haul.”
He added that from his perspective, the Knot Standard acquisition brings a lot of technological capabilities to the Billy Reid company and will support the production of “more special pieces” and “smaller production runs. We’ll now have the opportunity to do more special things for the customer who wants that experience — we now have the technology.”
Reid stressed that his textile development and production won’t change, but the acquisition will allow him to use some of the unique fabrics he creates in made-to-measure garments. “It opens up a whole new world,” he said, adding that his Bond peacoat, a perennial bestseller, can now be offered on a made-to-measure basis.
Partnering with Knot Standard also allows Billy Reid to “build awareness and reach more customers by integrating our two customer bases,” he said. “The world is moving fast, but this puts us in a really good position to build from. This merger is a great step forward for us.”
Zens said that although the pandemic forced the brand to make some difficult decisions and close some stores — at one point, there had been 20 Billy Reid locations around the country — “We came out cleaner and it’s great to be in growth mode. Last year, our comps were up 25 to 30 percent.”
Once the acquisition is finalized, Zens said he will “revisit” his plans to raise more capital to grow the new and improved Billy Reid company. “It’ll be exciting to layer on more stores and return to Shindig,” he said of the designer’s consumer-facing music, art, food and fashion festival held each summer in Florence, Ala. “There will be a lot more to come for fall.”
Reid said the last Shindig was in 2019 before COVID-19 and he hopes to revive it later this year.
Mueller said Knot Standard services more than 120 retail locations globally, accounting for about $30 million in sales. The company will continue to work with these clients including Nordstrom, where it is in 39 locations and rolling out to 97 by the end of the year. At Nordstrom as well as other stores in the U.S., U.K. and Australia, the garments produced will carry the Knot Standard label. And at Nordstrom, the company is producing made-to-measure for other brands the retailer carries such as Hart Schaffner Marx and Jack Victor, Mueller said. Other retail customers use the company’s made-to-measure software, measurement and ordering tools for their own product.
Mueller said by the end of the summer, six additional retailers will come on board, including 40 David Jones stores in Australia. “We’re working on a pilot for Todd Snyder and with other big brands I can’t name yet,” he said. He did reveal he’s working with Brooks Brothers to launch a custom capsule with its creative director Michael Bastian in all of its stores along with custom womenswear that will launch in the fall.
Mueller said 18 months after signing on with Brooks Brothers, 10 percent of its suit sales are now made-to-measure, and Knot Standard is the 12th largest men’s brand within Nordstrom and wholesale sales there are up 84 percent over last year. “Things are really shifting,” he said, and retailers are embracing the idea of being able to offer customized product without having to hold any inventory and just paying Knot Standard a percent of sales.
Knot Standard was founded in 2011 by Mueller and John Ballay, who met as young expats in Dubai. They were inspired by the bespoke clothing so prevalent in the region and believed American men deserved the same level of quality and customization. Ballay is no longer involved in the business and is now consulting and advising other companies.
