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CSS Industries, the company that owns the Big 4 sewing pattern brands (Simplicity, McCall’s, Vogue, and Butterick) has announced that it is being acquired by Design Group, a UK-based company specializing in gift wrap, greeting cards, bags, and creative play products. Design Group paid $9.40 per share in an all cash transaction valued at approximately $88 million.

“We have known Paul and his team for many years, and we believe that there is a strong cultural fit between the two organizations,” commented Christopher J. Munyan, CSS’ President and Chief Executive Officer, referring to Paul Fineman, Design Group’s Chief Executive Officer.

Besides owning the sewing pattern brands, CSS Industries produces gift wrap, buttons, ribbon and trim, and other craft products.

“CSS’ vision, values and culture are closely aligned with those of Design Group, including their focus on expanding into complementary categories and growth through acquisition,” said Munyan in the press release.

CSS Industries is a publicly traded company and, as you can see, the stock price over the last two years has dropped over 80% and now trades where it did in the 1980s.

 

How it happened

In an effort to diversity and stabilize revenue the company acquired McCalls in December 2016 for $14 million and Simplicity in November 2017, from Wilton Brands, for $64 million.

In 2019, an activist investor, which is an investment fund that buys shares in a distressed company in order to take control or force a sale, accumulated nearly 10% of the company’s stock. CSS then took a number of financial steps to make a hostile takeover more difficult which further depressed the share price. In early January it was reported that they were in talks with the activist investor and it appears the result of that negotiation was the sale announced today.

Where does this leave us?

Now the sewing industry finds itself in a situation in which the Big 4 sewing pattern companies, all of which have rich histories in the United States, are owned by a British firm. Remember that Butterick was founded in 1863 by Ebenezer Butterick, an American tailor born in Sterling, Massachusetts. The McCall Pattern Company was founded in 1870 in New York City by James McCall, a Scottish tailor. Vogue was originally Vogue Pattern Service founded in 1899 as a spinoff of Vogue Magazine. And Simplicity Patterns was founded by Russian immigrant James Shapiro in New York City in 1927.

The Big 4 have changed hands two or three times in the last five years, each an effort to create larger conglomerates. What will be their fate now? Perhaps Design Group will hang on to their sewing pattern brands and nurture and grow them, even though they are certainly outliers to their core business. But I think it’s also possible that Design Group could bundle them and sell them off to a company for which they are a better strategic fit than one with a primary focus in gift wrap and party supplies. Or Design Group could shut them down entirely if it turns out they aren’t very profitable over time.

To me, the bigger question is whether all four of these brands are strong enough to withstand the years to come, potentially being passed from owner to owner looking for profits. Given the competition from indie pattern brands with strong followings that offer both digital downloads and print patterns, will all four legacy brands still be here in a decade? Unless they land with an owner that’s truly dedicated to sewing, I predict no.

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