Milano

 

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Milano is the largest discount clothing retailer in Mexico.

Our $200 million acquisition of the company is a landmark investment for the Mexican M&A market. Funded with $110 million in equity and $90 million in debt, it is the country’s first mid-market private equity transaction to use significant leverage based mainly on cash flow.

Founded over 70 years ago, Milano has a long tradition of selling apparel to Mexico’s low- to middle-income segments. Initially focused on men’s clothing, the company has broadened its offering to include affordable, quality apparel for the whole family. Today it is the dominant player in the market, with 257 stores in 120 cities and sales of $260 million, making it twice the size of its nearest competitor. An icon in the industry, the business enjoys exceptionally strong brand awareness, with an estimated one in three Mexicans buying its products at least once a year.

The Mexican discount clothing market is highly fragmented and underpenetrated. Milano is one of only a handful of specialized national chains, with the rest of the market consisting of small regional chains, single-store boutiques, flea markets and informal commerce. While the company already has impressive coverage, research shows the market could support 150-200 more stores, providing significant scope for further expansion.

Led by new management, the strategy centers on a major store rollout program and implementation of operating efficiencies across all aspects of the business. Plans call for opening at least 80 stores over the next five years, including additional locations in existing cities as well as stores in cities not yet served. Operationally, management will focus on improving inventory control, enhancing product selection and merchandising, optimizing store location and layout, and increasing marketing and promotional activities.

 

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