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How Bra Startup True & Co. Got Acquired by Calvin Klein Owner PVH

Both parties stand to benefit significantly.
True & Co.'s popular 'Second Skin' bra. Photo: Courtesy of True & Co.

True & Co.'s popular 'Second Skin' bra. Photo: Courtesy of True & Co.

On Friday, PVH — a fairly sleepy, but large, 136-year-old New York-based apparel company announced it would be adding a new brand to its powerful portfolio, which includes the widely known Calvin Klein, Tommy Hilfiger, Van Heusen, Izod, Arrow, Speedo and Warner's and Olga. The newcomer is True & Co., a five-year-old digital-first, direct-to-consumer e-commerce startup focused on bras that is not so widely-known. The terms of the transaction were not disclosed.

San Francisco-based True & Co. popped up around the same time as a few other e-commerce companies hoping to disrupt the lingerie market and take a bite out of Victoria's Secret's market share. What made True & Co. different was its data-driven approach and the fact that it initially sold brands other than its own. Prospective customers can take a quiz about their bodies to get recommendations for the bras that will fit them best. So far, five million people have done so.

As is often the case with startup acquisitions, it was likely this data — and True & Co.'s expertise in digital — that was attractive to PVH, for whom this is a first-ever digital-first e-commerce acquisition. "Today's announcement illustrates our commitment to driving innovation across our business and demonstrates our commitment to making strategic investments in our digital platforms to support our long-term growth initiatives," said Emanuel Chirico, Chairman and Chief Executive Officer, PVH Corp., in a statement. "We believe that we can leverage the analytics tools of this data-driven company, while leveraging PVH's intimates category expertise, including global brand management, product know-how and supply chain."

True & Co.'s website. 

True & Co.'s website

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It's that last part that made accepting PVH's offer a no-brainer for Michelle Lam, the founder of True & Co., whom we caught up with on the phone Monday afternoon. Since we last spoke with her in 2014, the business has grown significantly. While she declined to reveal sales numbers, she did say that the company's most recent quarter was its most successful yet. "We are on a growth trajectory that is pretty aggressive right now, and we're very fortunate to be able to partner with PVH to be able to take advantage of that," she said, noting that the inventory has shifted from 20-percent in-house brand (as opposed to third-party brands) to 80-percent in-house, with innovative new styles and designs being informed by the aforementioned data. However, this shift has brought about some significant customer service challenges. 

"We've been out of stock a lot of the time," she admitted. One could argue that's a good problem to have, but not really if you want customers to be happy. "If you've been watching some of our press over the last couple of months or our website from last July/August, you will find that this out of stock issue is something that we've been wrestling with... for quite a while." Scaling production is a common challenge for any small but fast-growing business, and Lam explained that she had always been looking for both financial and strategic options in terms of fundraising and that PVH's supply chain expertise — particularly when it comes to bras and underwear — made it an especially good fit. "It was time that True & Co. really needed to take advantage of that supply chain potential to realize our potential," said Lam. "We're not a marketplace; we're not inventory-light. We have to continue producing physical goods that are innovative and also high quality and that’s really difficult to do as a standalone smallish brand." Obviously a large part of PVH's business is intimates with Calvin Klein underwear being a prominent segment of that. Lam saw a lot of parallels with that and True & Co. as far as the minimalist aesthetic and confident attitude of both brands.

So what does the acquisition mean for True & Co.? For now, Lam's main focus is getting 100 percent in stock, and then continuing to release new products based on customer feedback. Otherwise, according to Lam, not much will change. "PVH is definitely in favor of providing us with the resources that we need to grow as a stand-alone brand and that's really exciting for us, so we expect to continue being based out here in San Francisco; we expect to be doing the same things that we've been doing; the vision is going to remain the same, which as a founder, I'm really excited about." Brick-and-mortar, for instance, hasn't really been discussed. While it isn't off the table, she stressed that from PVH's point of view, "We really are a digital acquisition for them."

And one that we didn't really see coming from such an old, traditional-seeming company. Lam hinted that this could be a "harbinger of more to come."

"The press has been very supportive of digital-first brands and what we've been doing; but make no mistake, when it comes down to physical product expertise, these guys have it and I think that's a good combination."

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