The PCA Companies has made its first retail acquisition.
The distribution platform has snapped up the U.S. wholesale division of Space NK, which entails roughly 600 points of distribution across Bloomingdale’s, Nordstrom, Nordstrom Rack, Hudson Bay and the company’s shop-in-shop collaboration with Walmart and Beauty SpaceNK.
PCA Companies said that although the platform will be renamed in the U.S., it does not plan to touch the existing brand matrix or retail partnerships. Financial terms of the deal were not disclosed.
“The U.S. business in its current form has been going for about three years. We pivoted out of retail to focus on our version of wholesale,” said Andy Lightfoot, chief executive officer of Space NK. “We’ve grown a lot, but we have seen a number of opportunities that we couldn’t fully capitalize on because of the scale of the business in the U.S.
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“We saw [the U.S. and U.K.] businesses becoming more and more differentiated, and the benefits we had leveraged earlier were being diminished, so it was a natural division,” he continued.
Lightfoot will be focused on the U.K. — where the beauty retail competition is ramping up with Sephora’s recent expansion — with “no immediate plans” to expand beyond, he said.
The deal comes as PCA Companies, a distributor with a stronghold in fragrance, has augmented its roster of brands. Those include Fornasetti, Balmain, Thomas Kosmala, JVN and Pipette. It is currently an $850 million business, according to a statement.
“Space NK on their own have done such an amazing job. It’s meeting the customer where they are today,” said Piyush Golia, CEO of PCA Companies. “Combining forces on this and having focused on just the U.S. part will augment Space NK’s success and what they’ve been doing.”
The deal is a reflection of the blurring lines between mass and prestige channels and is part of a greater effort to have more touchpoints with consumers, Golia said. Where it makes sense, he will also utilize Space NK as a flywheel of distribution for his brand partners.
“For some of the brands we work with, it makes sense to be in an environment that Space NK has already created. In helping to recruit other brands, it makes the focus a lot more on the U.S. growth and in North America,” he said.
Part of that will be expanding the distribution. “We’d love to be able to roll this out to other retailers, especially as there are so many other brands today than there used to be,” Golia said. “How do you curate that and help the retailers within their environment bring what is most meaningful, and be able to bring the agility required today?”
He also sees room for more fragrance brands — his company’s forte. “That seems like a natural extension,” Golia said. “And even continuing with hair care, beauty tools and appliances.”
