The Brazilian owner of Havaianas, the maker of flip flops, is taking a 49.9 percent stake in the shoe brand Rothy’s, valuing it at $1 billion in the industry’s latest bet on the promise of sustainable fashion.
Rothy’s, which introduced its shoes in 2016 and is based in San Francisco, is known for its eco-friendly — and fashionable — ballet flats, worn by celebrities such as Meghan Markle. The brand says it makes its shoes from single-use plastic bottles in a 300,000-square-foot factory in Dongguan, China. In recent years, the company has ventured into bags, wallets and men’s loafers, also made from recycled and marine plastic, and has stores in Los Angeles, New York and other cities.
Investors and shoppers are increasingly paying attention to the heritage and social impact of apparel and accessories they back or buy. AllBirds, which also makes shoes from sustainable sources, cashed in on that interest this year in an initial public offering that valued it at about $4 billion.
Alpargatas, the footwear company that owns Havaianas, will initially pay Rothy’s $200 million in cash, followed by a purchase of about $275 million of shares in Rothy’s. The founders of Rothy’s, Stephen Hawthornthwaite, who is chief executive, and Roth Martin, the president, will remain significant owners and continue to oversee operations, they said in an interview.
Rothy’s, which brought in about $140 million in net revenue in the year leading up to November, is “meaningfully profitable,” Mr. Hawthornthwaite said. The company has taken on $5 million from outside investors since its inception, and will put proceeds from the Alpargatas deal into brand promotion and use the Havaianas network to expand its retail presence.
Alpargatas has the option to buy as much as the entirety of Rothy’s between the first and fourth anniversaries of the deal, which was struck on Monday. Roberto Funari, the chief executive of Alpargatas, said the deal would allow his company to broaden its footwear beyond the iconic flip-flops.