ACS Clothing has set out its ambition to break into the lucrative US tuxedo hire market after securing £8.8 million of additional investment from Business Growth Fund (BGF).
The Glasgow-based formal wear specialist has signed a lease on a 244,000 square foot distribution facility in Memphis, Tennessee, as it targets a slice of a market believed to be worth $1.2 billion.
ACS, which supplies UK retailers such as Slaters, Burton and Austin Reed, has hired tuxedo rental big hitter Peter Abruzzo to run its US operation.
The company’s expansion across the Atlantic is being backed by follow on funding from BGF, which initially provided growth capital of £8.5m to the company in January last year.
ACS used the initial funding to develop its e-commerce software, Xedo, which allows consumers to hire outfits through the websites of its retail partners, introduce new ranges of suits, and consolidate its position as the UK market leader.
Chief executive Richard Freedman believes his company’s online software, which aims to remove the hassle from hiring wedding outfits, will help it stand apart in the competitive market across the Atlantic.
Mr Freedman, whose firm employs 140 staff at its base in Lanarkshire’s Eurocentral business park, said its confidence to move into the US is informed by the “quality of garments” ACS provides, in addition to “the fact we are very competent operators.”
The clothing for the US operation, which will seek to take advantage of the booming wedding and school prom, markets, will be sourced in a range of countries, including Europe, China and Columbia.
Mr Freedman: “Being based in Memphis, beside FedEx’s hub, gives us a very good distribution capability throughout the whole of the US.
“Certainly the e-commerce platform that we are building from Xedo will have a lot of functionality that will really help the brides and grooms style their outfits and manage their wedding party.”
“The software is incredibly important.”
Mr Freedman said the investment from BGF it has worked well for the business, noting that it has shown a good understanding of the company since becoming involved.
He said the latest tranche of funding is essential to its aspirations for the US.
But he declined to say whether BGF has taken a bigger stake in the company, noting only that its investment continues to be “split between debt and equity”.
BGF now has two executives on the board of ACS – Scottish regional director Simon Munro and Gemma Hamilton.
“They’ve been a good partner, very understanding, very supportive,” Mr Freedman said. “[They have been] very fair in their dealings with us. They certainly understand the business well having been involved with us for a year and a half. That’s definitely more appealing than bringing in another firm and having somebody knew. We find they have made a positive contribution at board level.
“They have made our board and company better.”
Mr Munro said: “ACS Clothing is already the largest business of its kind in Europe – replicating this success in the US is a really exciting opportunity and one that BGF is delighted to be part of.
“We have been really impressed with the progress that Richard and his team have made since our initial investment in January last year. We continue to be supportive of ACS, having worked together to understand and develop the growth plans for the US.
“Supporting our portfolio companies with follow-on investments such as this is a big part of BGF’s strategy.”
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