Image: Proenza Schouler

Proenza Schouler is “struggling,” according to a new report from WWD, which states that the New York-based womenswear brand “is in advanced talks with several potential investors who could inject new money into the struggling business and buy out existing stockholders.” The report comes just months after the brand – which was founded in 2002 by design darlings Jack McCollough and Lazaro Hernandez and rose to early fame thanks to their “it” PS1 bags –  returned to the New York Fashion Week calendar following a brief sojourn to Paris.

Proenza Schouler – which holds the title of one of the most celebrated stateside names – did not provide a comment to WWD, but the fashion trade publication asserts that the brand has been on the hunt for a new investor “as the current backers look for an exit.”

As of June 2015, Castanea Partners announced, in light of an ever-mounting rumor mill, that it had taken a minority stake in the brand for an undisclosed sum. The private equity firm joined an existing stable of PS investors, led by Theory founder Andrew Rosen, who had entered into the PS picture in 2011 by buying a 47.5 percent stake in the company from Permira, the European private equity firm that had acquired the stake from the Valentino Fashion Group, which first invested in Proenza in 2007. Got that all straight?

The news that Castanea may be looking for an out is not necessarily news. BoF reported in September that Castanea is “unlikely to back the label in the long-term,” and the Proenza Schouler “boys,” as the industry coined McCollough and Hernandez years ago, have known that. “One could argue that the plan for Castanea would be to then sell their stake to a strategic partner who can help us take things to the next level,” according to Hernandez, citing Thom Browne, which was sold this summer by its majority owner, private equity firm Sandbridge Capital, to Zegna in a $500 million deal, as an example of a similar strategy.

News about potential investments in Proenza Schouler has been swirling with some voraciousness for years, in part because, as the New York Times’ Vanessa Friedman put it in 2015, Proenza Schouler “has long been an object of investor and acquisition desire: full of potential, only 13 years old [in 2015], with an outsize fashion reputation.”

Before news of the Castanea deal broke, LVMH Moët Hennessy Louis Vuitton was said to be the frontrunner in landing the investment opportunity. In the summer of 2014, British Vogue was busy reporting that LVMH was “finally set to buy into” the New York-based “it” brand, with the parties reportedly in talks about LVMH buying the 47.5 percent stake from Rosen and co.

That potential deal – which has been rumored for over a year – never came intro fruition, and given the Castanea buy-in, was packaged away with the many other would-be, could-be fashion deals that never actually come to be.

This is not the first time that Proenza has been plagued with reports of financial trouble. In August 2016, Patrice Lataillade – Proenza Schouler’s former CEO – filed suit against LVMH, the brand, and its longtime CEO Shirley Cooke (who stepped down two years ago when new CEO Judd Crane joined) based on claims of unlawful employment discrimination and wrongful termination. In the process of making his Title VII claims, Lataillade’s complaint shed light on the (alleged) reasons why the much rumored-LVMH / Proenza Schouler deal never came to be.

Lataillade’s asserted in that since-settle suit that in light of “declining sales,” Proenza began searching for new investors and “in or around early spring 2014,” LVMH swiftly “emerged as a promising solution to Proenza’s cash flow problem.” The two brands “began negotiating a deal” and “executed a ‘Term Sheet for Acquisition’” in or around November 2014, which “gave LVMH an exclusive right to acquire a majority interest in Proenza until March 31, 2015.”

LVMH never acted on that right, allegedly because “LVMH and Proenza could not agree on the value of the company.”

Some of the reports that have come on the heels of the Castanea deal shed a more positive light on Proenza’s business. For instance, over the past couple of years, the brand has introduced a number of potentially quite lucrative ventures. There is their second, more casual line, called PSWL, an acronym for Proenza Schouler White Label, which was bringing in more than half of their revenue as of this fall.

After a 2015 report that Hernandez and McCollough would join L’Oréal’s Designer Brands Fragrances portfolio, the brand released their first-ever fragrance early this year, a deal that could be a particularly cash-happy one, as licensed goods are notorious in helping brands to pad their bottom lines quite nicely.

And still yet, they are placing a strong emphasis on shoes, which is their fastest-growing category, and looking to Asia as a bright spot for expansion.

In short: 16 years after the start of Proenza Schouler, its founders are focused on building “a strong business,” one that they note, may never be a billion dollar one (and “maybe that is fine.”).