Kellwood Co.’s portfolio continues to slim down, as the company confirmed it will no longer license the bridge-priced ck Calvin Klein line.
Phillips-Van Heusen Corp. said in July that it would move the Calvin Klein white label license from Kellwood Co. to G-III Apparel Group Ltd., but PVH initially declined comment on the bridge sportswear license, which Kellwood has held only since 2006. Sources speculate G-III will also receive the bridge sportswear license. Kellwood’s licensing agreements with PVH ran through 2012, but both companies had said they were unhappy with the lines’ performances.
Calvin Klein Inc. has no immediate plans to renew the bridge license in the U.S., focusing on the Calvin Klein Collection and Calvin Klein white label businesses in the U.S. Overseas, however, the ck Calvin Klein line is seen as a key driver in Europe, the Middle East, Asia and Japan with more than 58 freestanding stores by the end of 2007 and another 50 planned to open by the end of 2010.
Additionally, this summer, Sun Capital Partners Inc., which bought Kellwood in February, broke off the vendor’s nonapparel divisions, American Recreation Products Inc. and Gerber Childrenswear Inc., into separate stand-alone companies within Sun but outside Kellwood.
American Recreation and Gerber were among the most profitable parts of Kellwood’s $1.6 billion portfolio, together accounting for about $600 million in volume and much of the company’s net income.
“One of the first things Sun did was break off Gerber and American Recreation Products as stand-alone companies,” said Michael Kramer, the new chief executive officer of Kellwood. “There were very little synergies with the rest of the women’s wear portfolio.”
Removing the sleeping bag and children’s components of the business leaves Kellwood with a women’s apparel-focused portfolio, just shy of $1 billion in volume. Kellwood’s remaining brands include Baby Phat, Vince and Sag Harbor, on which Kramer is now focusing his full energies.
Positioned as stand-alone businesses, Gerber and American Recreation could be more easily sold, if the private equity firm decides to cash out on them. Sun Capital could not be reached for comment Wednesday.
Kellwood acquired Gerber in 2002 and American Recreation in 1989, and their soft goods products consistently helped offset losses from Kellwood’s more mature women’s apparel brands.
“Post closing, we realized that these businesses were noncore to Kellwood and that they were self-contained units having independent management teams, IT systems, back-office support, and sales and marketing teams,” said Richard Hurwitz, vice president of communications for Sun Capital. “As such, by spinning them off to operate as stand-alone companies, we will free their respective management teams allowing them to focus effectively on fulfilling their strategic plans.”
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