Aerosoles Owner American Exchange Group Acquires HatchCollective To Enter The Beauty Category

American Exchange Group, owner of footwear brands White Mountain and Aerosoles, has broken into the beauty category by acquiring brand incubator HatchCollective.

Terms of the deal weren’t disclosed. New York-based American Exchange Group takes over HatchCollective, which it’s renaming AX Beauty Brands, from Lion Capital. The British private equity firm purchased Los Angeles-based HatchCollective, then called HatchBeauty, in 2019. Ben Bennett and Tracy Holland, who’ve gone on to start The Center and Goodwill Brands, respectively, founded HatchBeauty in 2009.

“Our goal is all about growth and having as much market share as possible, and nowadays the way to do that is to have multiple product categories and to really look at where the hot categories are,” says Steve Velasquez, chief strategy officer at American Exchange Group. “We have been hearing from our retail partners that health, beauty and personal care are just growing at such an exponential rate. We saw it as a great opportunity to enter that space and adopt what has worked in our accessories product categories into this new category.”

Inclusive of its warehouse, HatchCollective had about 50 employees earlier this year. With American Exchange Group shouldering logistics, roughly half the company’s employees are joining American Exchange Group. President and chief commercial officer Kristin Bibb remains in her role. Trendalytics isn’t part of the transaction, although Bibb notes AX Beauty Brands will retain a close relationship with it. HatchBeauty acquired the analytics platform in 2021.

Prior to its sale to American Exchange Group, HatchCollective built a business across owned, store-exclusive and private-label brands. Owned brands are the biggest portion of its business, and AX Beauty Brands has about 14 owned brands, notably nature-inspired personal care brand NatureWell, celebrity hairstylist-connected haircare brand Orlando Pita Play and textured haircare brand Txtur. The brands are carried by retailers like Target, Sam’s Club, Amazon, Costco and Dillard’s.

Dollar General is assuming intellectual property for the brands Scent Happy, 5 Deep Breaths and Story that HatchCollective developed for the chain. Costco, Disney and Trader Joe’s are among AX Beauty Brands’ private-label clients. American Exchange Group has connections to retailers through its brands that it can connect to AX Beauty Brands to increase sales of its beauty and personal care merchandise. The company’s retail network extends from Anthropologie to Zulily.

“We see continued growth obviously with American Exchange Group, but we see AX Beauty Brands being a significant percentage of that growth and of the overall business.”

“Many of the retail distribution channels that AX Beauty Brands, formerly Hatch, had were not necessarily the same or overlap with the strong retail partnerships that American Exchange Group has,” says Velasquez. “So, there is a very clear path for significant growth in new channels of distribution where we have seen success in American Exchange Group.”

CEO Alen Mamrout established privately held American Exchange Group in 2008. The company has recently gone on an acquisition spree. It bought Aerosoles in 2022 prior to picking up Mountain Footwear, creative services company Giant Propeller and HatchCollective this year. Velasquez says American Exchange Group is currently negotiating several more acquisitions.

“We are constantly looking for the right brand or company that can add value, and what I mean by that is to provide a very comprehensive offering for our retail partners,” he explains. “The market is really focused on department store, mid-tier, off-price and clubs, and when you look at them across the board, what we have seen is being able to go to retailers and showcase that we have a particular brand across multiple product categories and creating a more unified, comprehensive experience for the consumer when they walk in the door, that has been very important to them.”

Outside of the brands it owns, American Exchange Group holds license agreements for an array of products under labels such as Rampage, Ed Hardy and Mossimo. According to Velasquez, the company’s revenues are north of $500 million.

AX Beauty Brands can help devise personal care and beauty products for American Exchange Group’s non-personal care and beauty brands, and the parent company can leverage AX Beauty Brands’ brands for licensing extensions. While inbound licenses have been a critical part of American Exchange Group’s model, Velasquez mentions it’s shifting its strategy to focus on outbound licenses. Cynthia Nixon, who previously handled licensing at Town and Country Living and Nicole Miller, is EVP of licensing and brand development at American Exchange Group.

Velasquez says, “We see continued growth obviously with American Exchange Group, but we see AX Beauty Brands being a significant percentage of that growth and of the overall business.”

With beauty consumers dealing with the effects of inflation, AX Beauty Brands is leaning into its specialty of generating beauty and personal care products Bibb describes as “prestige-level” for shoppers not able or willing to pay prestige-level prices. She says it’s concentrating on “this idea of creating efficacious and beautiful products for the consumer at a great retail price point that everyone can enjoy and afford.”