Forget moderate vendor Kellwood Co. Welcome to the new Kellwood, brand manager.
The $1.96 billion vendor is out to recast itself over the next five years and said Tuesday that branded better-price-and-above business soon should equal its traditional nonbranded moderate offerings. The St. Louis-based company also took a major stride in its strategic plan Tuesday by selling its dress shirts manufacturing division Smart Shirts.
"Whereas Kellwood was once seen as the maker of moderate apparel and a manufacturer because we own Smart Shirts, the future of Kellwood is to be a brand-focused marketing enterprise," Robert C. Skinner Jr., chairman, president and chief executive officer of Kellwood, told WWD. "Smart Shirts was the only part of the operation where we were a manufacturer, as opposed to a brand manager. We felt our cash was better invested in brands than mills."
Smart Shirts, which has about $450 million in annual sales, was sold for $161 million, which includes selling manufacturing assets for $120 million to Youngor Group Co. Ltd. and the related real estate assets in Hong Kong for $41 million to Bright Treasure Development Ltd. Kellwood plans to use the proceeds to reduce debt and repurchase shares with the cash.
Kellwood had planned to invest more than $70 million in the next four years — more than 40 percent of the firm's total capital plan — into Smart Shirts, which produced shirts in a licensed and private label capacity for men's and some women's. With the changing market, including competition from vertically integrated manufacturers, Smart Shirts lost its competitive advantage, Skinner said.
Skinner said no other division or brand stuck out as inconsistent with the company's model like Smart Shirts, but he did say he will reconsider the portfolio with time and that divestiture is one means to correct the portfolio.
Like Jones Apparel Group and Liz Claiborne Inc. did on their third-quarter earnings calls last week, Kellwood used slides for the first time to accompany its investor conference call Tuesday. "This is a way to be more transparent to our shareholders," Skinner told WWD. "Shareholders always want more transparency, and I think companies, including Kellwood, are providing more information than in the past, to make sure that our story is understood in the best possible way."
Issa Rae stopped by WWD's NYC headquarters to talk about season two of "Insecure," which premieres this Sunday on HBO. Click link in bio for all the details. #wwdeye (📷: @jgreenery; Styled by @mayteallende)
A Stella McCartney sketch of a custom dress made from protein-based silk in partnership with biotech lab Bolt Threads. The dress will be displayed at The Museum of Modern Art's upcoming design exhibition, "Items: Is Fashion Modern?"