G-III Apparel Group Ltd. jumped into the outlet business Tuesday, paying $22.3 million to acquire the Wilsons The Leather Experts Inc. name and operations at 116 outlet stores.
The cash deal, disclosed after the market closed Tuesday, also included $18.5 million in inventory, distribution center operations and other trademarks and trade names. Joel Waller, Wilsons’ former chief executive officer and ceo at The Wet Seal Inc. until stepping down in September, will return as president of G-III’s new outlet division.
The company, which had been known as Wilsons and will now be called PreVu Inc., said the sale was part of its evolution to a mall-based accessories chain. Not included in the transaction are about 100 mall stores and a limited number of airport kiosk operations.
The deal gives G-III a vertical presence in the market, with both wholesale and retail operations and all the attendant concerns.
“Through carefully segregating our retail assortment from our wholesale offerings, we believe we can reenergize the Wilsons outlet stores under our direction without conflict to our existing customer base,” said Morris Goldfarb, G-III’s chairman and ceo. “We expect to be able to seamlessly create a vertical retail organization and move quickly to realize the benefits of that structure.”
The new division will include about 900 employees in store operations, merchandising, distribution, real estate and other back office operations in Minneapolis.
“There is an excellent opportunity to return this business to improved levels of profitability and to place it on a growth trajectory,” Goldfarb said.
G-III produces sportswear and outwear under its owned names, such as Andrew Marc, and under licensing deals with Calvin Klein, Sean John, Kenneth Cole, Tommy Hilfiger and others.
The outlet stores will carry a mixture of private-label and closeout goods, said Wayne S. Miller, G-III’s chief operating officer.
“This is a great way to hit the ground running,” he said. “We’ve wanted to be in the retail business for some time. It’s a great marriage for us to get into the business.”
Wilsons has struggled with strategic changes and general weakness in the economy.
G-III increased its guidance for this year after the acquisition, projecting earnings of $23.5 million to $24.4 million, up from $21.8 million to $22.7 million. Sales are slated to range from $720 million to $730 million, compared with the previously anticipated $650 million to $660 million.
Michael Searles, ceo of Wilsons since December 2004, left in March after the company reported a net loss for its fiscal year of $77.5 million on a sales decline of 12.7 percent to $280.4 million. In February, the company, which never recovered fully from the acquisition of a travel retail operation before the 9/11 attacks, laid out plans to close 160 stores and cut more than 1,000 jobs.