While most Canadian apparel companies are disappearing, a Montreal-based producer of mid-priced trendy fashions is mapping out an ambitious expansion with a fresh infusion of money from a group of private equity investors led by Genuity Capital Markets.
Effigi Inc., which sells brands such as Tag and Gagou Tagou to Costco, Wal-Mart and other chains, makes a wide array of clothing displayed in "shops within shops."
The company's founder and creative force, chief executive officer Sylvain Veronneau, wants to sell his concept to retailers in the U.S., Europe, Australia and the Middle East.
His aim is to transform Effigi's brands into labels as common as Nike or Tommy Hilfiger, outfitting shoppers from head to toe, literally.
"It's been a long journey for us to find the right partner and financing," Mr. Veronneau, 43, said in an interview.
"I spent 17 years of my life doing what's right for this company ... Genuity wants to help me do exactly what I'm doing now, which is expand the project and bring it to another level."
About two years ago Effigi launched bathing suits and outdoor wear with ultraviolet sun protection built into the fabric.
This fall it will roll out underwear with a moisturizing agent in the fabric that it says provides a cooling effect. It put oversized zippers and buckles on its children's snowsuits so that tiny fingers could more easily make adjustments.
In some ways Mr. Veronneau is following a similar path taken by Chip Wilson, founder of Vancouver-based Lululemon Athletica of yoga wear fame, industry observers said.
Both men created brands in Canada with a local following, and both are now trying to expand globally on the strength of their designs and reputation.
In late 2005, Lululemon got a $108-million investment from two private equity firms. Now it is preparing to raise about $200-million in an initial public offering.
Some industry experts are predicting that Effigi will also go public in an IPO.
"Effigi is very focused," said Elliot Lifson, vice-chairman of Peerless Clothing in Montreal and also president of the Canadian Apparel Federation.
"They have found their niche and they keep growing. They're aggressive ... It's very similar to what Chip Wilson did."
Mr. Veronneau, who is the largest shareholder, said he has no set plans to go public, although he didn't rule it out either.
He would not disclose the company's revenues nor the size of Genuity's investment, but said they were "substantial."
Officials at Genuity declined to comment.
Effigi has grown since it started in 1991 to 250 staff from 13.
It produces about 60 per cent of its products overseas, a far cry from everything being made in Quebec at its inception.
Genuity's investment - and vote of confidence - in Effigi underlines the importance for apparel makers and retailers to build their business around brand names, said Rob Moore, who is a consultant and former Hudson's Bay Co. vice-president.
"You can be a more valuable player if you have brands that have a relationship with the demographic or customer base you want to reach," Mr. Moore said.
He also drew a parallel between the founders of Effigi and Lululemon.
"They're driven by the vision of what the product is and what the brand stands for," he said.
"They have a clear vision of how they create their products for the customers they serve."
Effigi, which has branched out into home-decor items, has taken a page from more upscale fashion powerhouses such as Polo Ralph Lauren.
For years they have installed in-store boutiques in department stores. Now Mr. Veronneau wants to take the concept to the masses.
Already Effigi brands are sold at stores in 18 countries, including Australia.
Down Under, the company's bathing suits, with sun protection in the fabric, have taken off, benefiting from a heightened concern about the dangers of skin cancer, he said.
With the new cash infusion, Effigi will try to strengthen its logistics to shave costs and ensure that goods get to their global destinations on time, he said.
He recently hired a former HBC executive, Peter Kenyon, as chief operating officer to lead the transition.
Techno-wear
The Montreal-based fashion producer works with its suppliers to come up with new ideas to respond to shifting customer needs. It strives to make high volumes of the goods, taking advantage of economies of scale to keep prices low.
Bathing suits and outdoor wear have ultraviolet sun protection built into the fabrics.
Snowsuits have oversized zippers and buckles to help children adjust the clothes themselves.
This fall Effigi will launch underwear with a moisturizing agent in the fabric that it says provides a cooling effect. Already the company sees further applications for this new technology.
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