PVH Corp. has inked a definitive agreement to sell its G.H. Bass & Co. footwear business to G-III Apparel Group Ltd. for about $50 million in cash. The transaction, revealed late Wednesday, is expected to close early in PVH’s fiscal fourth quarter, which begins in November.
PVH has sought to unload the struggling Bass division, which it acquired in 1987, so it can focus on its higher-growth Calvin Klein and Tommy Hilfiger brands. It began seeking a buyer for Bass following its acquisition of The Warnaco Group Inc. in February, said Emanuel Chirico, chairman and chief executive officer of PVH.
“Our retail heritage businesses have really been struggling for the past few years. This significantly reduced that exposure,” said Chirico. “[Bass] is a heritage brand that is well known, but we have not been investing in the brand from a marketing point of view. That has the ramification of putting sales and gross margin pressure on the business.”
Bass currently does $250 million in volume in about 160 outlet stores, or about 40 percent of PVH’s heritage brands retail business, which also includes Izod and Van Heusen stores. Sales are split evenly between men’s and women’s.
Another $30 million-plus in Bass wholesale sales comes from Harbor Footwear Group Ltd., which holds the license for men’s, women’s and children’s footwear in the wholesale channel.
For the six months ended Aug. 4, same-store sales dropped 9 percent in PVH’s heritage retail business, due mostly to continued weak performance in the Bass retail unit. PVH has no plans at this point to divest other heritage brands such as Arrow, Speedo, Olga or Warner’s, said Chirico.
G-III plans to improve product design, marketing and the in-store experience at Bass stores, said company chairman, president and ceo Morris Goldfarb. “It’s not often you are able to acquire a company that has two iconic components to it — Weejuns and Bucs are the heart and soul of American footwear,” he noted of two signature Bass designs. “It was a brand that wasn’t given the appropriate attention at PVH.”
G-III has deep relationships with PVH, holding licenses for women’s Calvin Klein apparel in North America and Tommy Hilfiger men’s and women’s outerwear and luggage.
The Bass business will be organized under G-III’s Wilsons Leather division, which operates about 150 stores, mostly in outlet malls. Kristin Burrows, president of Bass, will report to Bill Hutchison, president of Wilsons Leather.
The creative and sourcing teams at Bass will remain headquartered in New York, but other functions like retail operations and warehousing will be consolidated at Wilsons Leather’s headquarters in Minneapolis, said Goldfarb.
In Bass outlet stores, about 65 percent of sales are in footwear and 35 percent are in apparel and accessories. PVH will retain the Bass men’s apparel business, under license from G-III, which is also distributed in wholesale accounts such as J.C. Penney and Bon-Ton Stores. Goldfarb said he expects to sign new Bass licenses in additional categories.
“For the next year, we’re going to shore up the underpinning of the business and make sure it’s fueled for growth,” said Goldfarb. “We know we can improve on dollars per square foot generated, and we think we can grow the wholesale business quickly.”
PVH will use proceeds from the deal to make additional debt payments in 2013. Despite the sale, PVH reaffirmed its earnings per share guidance of $7 for the full fiscal year, on a non-GAAP basis. For the current third quarter, EPS is forecast at $2.25, up from prior guidance of $2.20.
PVH expects the deal to dilute its fourth quarter earnings by five cents per share, on a non-GAAP basis, and approximately 15 cents per share on an annual basis going forward. PVH said it will incur an approximately $20 million pre-tax loss in connection to the sale of the Bass assets.
G-III expects the acquisition to dilute its net income by 10 cents per share for the fiscal year ended Jan. 31, but accretive thereafter on an annual basis.
Breaking News: @louisvuitton's men's artistic director @mrkimjones is leaving the French fashion house after nearly 7 years. Jones joined Louis Vuitton in 2011, following a three year tenure as creative director of British luxury goods brand Alfred Dunhill. Jones is to exit Louis Vuitton after showing his fall 2018 collection for the brand in Paris on Thursday. Read the full exclusive story on WWD.com. Link in bio. #wwdnews #wwdfashion
For men’s fall 2018, @giuseppezanotti drew on elements from streetwear, sport, biker, combat and rock ‘n’ roll. Pictured here are a pair of shoes from the collection, featuring zippers, rhinestones, and silver hardware. Head to WWD.com to see a roundup of the accessories from Milan’s men’s fall 2018 shows. #wwdfashion (📷: Andrea Delb)
To celebrate the 25th anniversary of @ralphlauren’s snowboarding collection, the brand is mining its archives. The iconic brand is reintroducing vintage styles and dropping new designs for a color capsule that will be available in Ralph Lauren stores and @openingceremony on January 25. The capsule will consist of 10 pieces, including the Snow Beach Pullover, pictured here, which is a collector’s item that rapper Raekwon wore in Wu-Tang Clan’s “Can It Be All So Simple” video. #wwdfashion (📷: Tom Gould)
For @rochasofficial’s pre-fall 2018 collection, creative director Alessandro Dell’Acqua channeled the sophisticated and intriguing Catherine Denevue in the film “Belle de Jour.” Polished collarless coats, midi skirts, suits and ’60s graphic motifs were all featured in the collection, adding a sense of discreet luxury. See the rest of the photos on WWD.com #wwdfashion
“We tried to produce clothing of that couture quality, but the most daunting part was that we only had a matter of days [to do it],” said costume designer Lou Eyrich, who recreated Gianni Versace’s iconic looks for @americancrimestoryfx. Eyrich searched online retailers and vintage shops for original pieces from the design house and for @penelopecruzoficial, who plays Donatella Versace. Head to WWD.com to read how she created the Versace world. #wwdfashion
Only three months after her stellar debut catwalk season, @kaiagerber has inked her first big design collaboration –– with @karllagerfeld. The collection blends Lagerfeld’s Parisian chic aesthetic and the model’s signature West Coast casual style via RTW, accessories, footwear and more. The #KarlLagerfeldxKaia collection will launch in September with a series of events. Get all the details on WWD.com. #wwdnews #wwdfashion
Harrods plans to remove the famous statue of Princess Diana and Dodi Al Fayed from the bottom of the Egyptian escalators and hand it back to Mohamed Al-Fayed. “We are very proud to have played our role in celebrating the lives of Diana, Princess of Wales and Dodi Al Fayed at Harrods and to have welcomed people from around the world to visit the memorial for the past 20 years,” said Michael Ward, Harrods managing director. “With the announcement of the new official memorial statue to Diana, Princess of Wales at Kensington Palace, we feel that the time is right to return this memorial to Mr. Al Fayed and for the public to be invited to pay their respects at the palace.” More on the news, with reporting by @loreleimarfil, at WWD.com. #wwdnews