NEW YORK — Sara Lee Corp.’s decision to split apart its $4.5 billion apparel business and operations in the Americas-Asia territories, and sell its $1.8 billion European apparel business, is viewed by the industry as a smart decision that will create value for shareholders and strengthen the company’s cadre of brands.
Executives generally agreed that the timing is right, as business conditions have improved and a growing number of investors are looking for opportunities, particularly in an existing company. The momentum is spurred by the mergers and acquisitions activity of retail giants, including the $11 billion proposed takeover of Sears, Roebuck & Co. by Kmart and Federated Department Stores’ $17 billion acquisition of May Department Stores.
Several industry executives speculated whether Sara Lee intends to sell any of its portfolio of brands, which includes Hanes, Playtex, Bali, Champion, Wonderbra, L’eggs, Barely There and Just My Size.
Lee Chaden, chief executive officer of Sara Lee Branded Apparel, said, “Our apparel brands are not for sale. The current portfolio is incredibly strong and on strategy. We have powerful brands that are category leaders and will form a strong basis for the new company’s future growth.”
Regarding Sara Lee’s strategy, Donald Franchescini, a former vice chairman of Sara Lee Corp., said, “I am very supportive of this move. It makes sense and it’s a positive for both businesses. It will give a sharper focus on the food business, and at the same, time find a home for intimate apparel.”
Sara Lee appears to be on a roll. The $19.6 billion conglomerate spun off Coach in 2000. Investors on board since the beginning tripled their money, the stock split 2-for-1 in July 2002 and Coach’s initial public offering was for 19.5 percent of the share. Sara Lee kept an 80.5 percent stake that it divested through a tender offer in April 2001. In the second quarter ended Jan. 25, Coach reported a 40.5 percent jump in earnings and authorized a 2-for-1 stock split. The stock has zoomed to more than $58 a share from about $5 in 2000.
“I think this is the best thing that could have happened to Sara Lee intimate apparel because I relate to it, ” said Bill Ghitis, president of Invista Inc., formerly the DuPont Textiles & Interiors unit of DuPont, which Koch Industries acquired last year. “When you’re not welcome in a company’s portfolio, you obviously don’t have a secure and focused direction.”While the plan to divest the Sara Lee apparel businesses is receiving praise, it also is raising questions about the viability of apparel brands, particularly established powerhouse names in a market that’s being squeezed by retail consolidation and proprietary retail brands.
Some industry executives believe Sara Lee may be ahead of the curve as a majority of apparel companies are forced to restructure manufacturing capabilities to handle potential fresh China quotas, and at the same time, bankroll new technology. Another variable is how fashion names and commodity-type labels will stack up against a growing assortment of exclusive store brands sold at lower prices.
“The cost today of coming up with new technology to create newness and innovation to keep the customer interested is prohibitive,’’ said Richard Leeds, chairman of Richard Leeds International, an independent sleepwear firm. “It requires a tremendous amount of money up front and that’s needed to get the margin to pay for it. If the branded apparel business is so terrific, why would Sara Lee be getting rid of it?”
Addressing brand integrity, Linda LoRe, president and ceo of Frederick’s of Hollywood, said, “We all have to continue to evolve and create loyalty with the consumer because they buy with emotion and they justify it any way they can. People are always looking for something new and the consumer is going to cast her vote regardless of the channel the brand is placed in. At the end of the day, it’s all about the brand and the experience of the customer.”
@pantone announced their Color of the Year 2018: Ultra Violet. Nearly 20 months after the musician Prince’s death, fashion is having a purple moment. Varying shades of purple appeared on spring or fall runways, from @christopherkane to @calvinklein. @gucci’s Alessandro Michele bathed his fall runway in ultra violet-colored light at one point. Pantone 18-3838 is meant to “push the boundaries of what inspires us to look upward and outward to the future.” #wwdnews #wwdfashion (📷: @kukukuba)
@badgalriri’s @fentybeauty launch in September was a massive success on social media, powering $72.9 million of earned media value, according to Tribe Dynamics. The brand’s foundation offering sparked conversations about diversity in beauty, launching the growth of emerging influencers and propelling the brand’s support on social media. Today, #fentybeauty won Launch of the Year at the WWD #BeautyIncAwards. (📷: Chema Moya/EPE-EFE)
@marianna_hewitt has become one of the most influential content creators in the beauty space, with almost 800,000 Instagram followers and a newly launched skin care line called @SummerFridays. Today, she was awarded Influencer of the Year at the WWD #BeautyIncAwards. (📸: @sophiachabbott )
As shopping behaviors evolve, the retail experience must follow. Head over to retail experts @colliersinternational’s Knowledge Leader series to read more about the shift in our shopping era. #colliersretail #lovecolliers
@prada opened a pop-up club, called Prada Double Club, in collaboration with German artist Cartsen Höller at @artbasel Miami. Last night, guests – including @youngparis, @ritaora and even Miuccia Prada herself – gathered in a former ice factory where the pop-up is housed for a performance from @wyclefjean. Go to WWD.com for full coverage on all the exhibits, parties and more at #ArtBaselMiami. #wwdeye (📷: @lexieblacklock)
@louboutinworld and @disney are making magic once again, creating a set of shoe designs for the release of “Star Wars: The Last Jedi.” Louboutin designed a pair of shoes for each of the film’s four female leads: Rey (@daisyridrey), Vice Admiral Amilyn Holdo (@lauradern), Captain Phasma (Gwendoline Christie) and Rose Tico (@kellymarietran). The shoes will debut on Saturday at the L.A. premiere of the latest episode. #wwdfashion
Today at the #BeautyIncAwards 2017, WWD will be joined by beauty leaders from around the world as we honor this year's most innovative people, products, brands and places. Follow along here and on Twitter for live coverage from the exclusive event. #wwdsummits (📷: @elizaflorendo)
Exclusive: Beauty superinfluencer @marianna_hewitt is launching her first-ever skin care brand with her business partner @laurengores. Their new line Summer Fridays, which will be sold exclusively at summerfridays.com starting in January, is launching with just one product – a hydrating cream Jet Lag Mask. “We wanted to focus on one product that was amazing,” said Hewitt. Read the full interview on WWD.com. Link in bio. #wwdbeauty #wwdnews
Michelin star-rated chef PJ Calapa marks his first solo endeavor with today’s opening of @scampinyc –– the new Southern Italian restaurant located in Manhattans’ Flatiron District. The upscale yet welcoming environment matches the menu, which includes two types of scampi: traditional Italian langoustines in butter and the Americanized version with shrimp over pasta 🍤 - pictured here. #wwdeye (📷: George Chinsee)