Brazilian Fashion Companies Arezzo & Co., Grupo Soma to Merge, New Powerhouse to Generate More Than $2B in Yearly Revenue

Stephen Garner
·3 min read
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Schutz parent company Arezzo & Co is merging with fellow Brazilian fashion company Grupo Soma in a new deal that sees the union of two of the largest fashion companies in Latin America.

As part of the deal, Arezzo and Grupo Soma will join together in a newly-formed company, with Arezzo owning a 54 percent controlling interest and Soma owning 46 percent. The name of the new company will be released at a later date, Arezzo said.

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While specific terms of the deal were not disclosed, Arezzo noted that the new company would have yearly revenues of 12 billion reals ($2.42 billion) with a collective portfolio of 34 brands, including Arezzo, Farm Rio, Hering, Reserva, Animale, Schutz, NV, Anacapri, Alexandre Birman, Cris Barros, Carol Bassi and Oficina, among others.

Arezzo & Co chief executive officer Alexandre Birman will assume the role of CEO of the newly formed conglomerate, while Roberto Jatahy from Grupo Soma will become the CEO of the womenswear business unit, and Rony Meisler, the CEO of the AR&Co unit, will head the menswear business unit.

Birman called the merger a “historic milestone” for the industry and one of the “most significant advancements of the decade,” in a statement earlier this week. “This new chapter will enable us to integrate a portfolio of brands with complementary businesses by enhancing cross-selling opportunities and improving operational efficiency,” Birman said.

“Together, Grupo Soma and Arezzo & Co will become the largest multinational retailer in the Brazilian fashion industry, leading the way with a shared vision for growth,” Jatahy added. “With the expansion of Farm Global and integration of women’s footwear into our brands, this partnership presents many opportunities for synergy and win-win growth.”

In an overview of the newly formed company, based on the trailing twelve months ending in the third quarter of 2023, the deal values the EBITDA at $1.5 billion reals ($300 million), reflecting a margin of 15.6 percent. Additionally, the net profit stands at $753 million reals ($152 million).

Pending approval from CADE (Administrative Council for Economic Defense), the transaction will introduce new structures for the brands within the group. Each brand will operate within one of four independent business units: Footwear and Accessories – Arezzo, Schutz, Anacapri, Vans, and others in the portfolio; Womenswear and Lifestyle – Animale, Carol Bassi, Maria Filó, NV, among others; Democratic Apparel – Hering, Hering Kids, Hering Intimates and Dzarm.

With a distribution network spanning over two thousand stores, including its own stores and franchises, the new company is projected to employ approximately 24,000 direct employees.

In April, Birman appeared at FN’s 2023 CEO Summit in Miami Beach, where he took attendees through an extensive chronology and evolution of the Brazilian company’s family origins, from founding Schutz at the age of 18 and merging with his father’s company to form Arezzo & Co. in 2007,  to quadrupling its market value since its 2011 IPO.

While speaking on industry concerns like inflation at April’s summit, the CEO also unveiled a long-term strategy of acquiring key made in Italy brands to apply Arezzo’s manufacturing efficiency with Italy’s craftsmanship and quality heritage. The first step in this plan happened last month at Paris Fashion Week, when Arezzo announced the majority stake acquisition of buzzy brand Paris Texas.

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