After about a year of searching, Walter Baker has found a partner.
Baker, founder and creative director of the three-year-old contemporary sportswear brand Walter, has finalized a partnership with the Miami-based TKO Apparel, a $150 million private label manufacturer of women's and men's wear for brands such as Calvin Klein, Ralph Lauren and Kenneth Cole. Under terms of the deal, TKO gains 50 percent ownership of the brand, which will continue to be designed by Baker.
"I started looking for a deal so that I can grow the brand," Baker said. "The issue I had was that I needed the back-end infrastructure in order to succeed in the growth."
Baker admitted his strengths are in design and not necessarily in the business end, so he was looking for a company that could handle production and distribution. After meeting with several companies, Baker settled on TKO.
"Walter has this great fashion sense, with no real ability to produce from the back end. His deliveries were running 40 to 50 days late, which cost him a lot of business and has become a major problem," said James Tate, co-owner and chief executive officer of TKO. Tate, who has a strong background in real estate, is also co-owner of Tate Realty and Tate Development Corp. He said that after seeing success in the real estate business, he believed he could bring some of the same practices to the apparel sector.
"After working with several brands developing a strong private label business, we are now looking to build brands, which is why we partnered with Walter," Tate said.
He said his team immediately hired more people to work on the Walter brand and began to restructure the manufacturing part of the business. By the end of this month, deliveries to stores will be on time and consistent, he added. Once delivery times are back on track, Tate said they will begin to grow the Walter brand globally.
"Seventy-five percent of Walter's business is done with specialty stores, which is great, but we want to see him in some of the best ones," he said. "Nordstrom just placed orders after a hiatus, which is very promising. As soon as they heard we were going in there, they ordered the product. That shows us that he knows what he is doing fashion-wise; now we want to see this line in Barneys and Bergdorf."Tate said Walter's wholesale volume currently stands at about $10 million, but he expects that number to increase to between $15 million and $18 million by the end of 2008. Baker said he has already begun thinking about growth and said he plans to add men's apparel, eyewear, handbags, home and shoes and to open his own retail locations in the near future. The line, which became known for its tailored jackets and has a big presence in Saks Fifth Avenue stores, will continue to wholesale from $65 to $150.
"Now I can really concentrate on the creative and work on adding even more value to the line," Baker said. "TKO's strengths are in building an infrastructure and organization, so they can work on that while I concentrate on fabrics and developing the product."
Tate said he plans to grow the Walter business in a similar way that TKO has expanded its other recently acquired brands. TKO acquired Evolution 2000, a men's wear label, about three years ago. Tate said when he purchased the company, the brand was bringing in $7.5 million annually. He expects it to do about $30 million in wholesale volume this year. A year ago, TKO also acquired GlobeTex Apparel, a knit company, and grew it from an $8 million firm into an $18 million business.
"There is no real reason why the Walter brand wouldn't grow at this point," Tate said. "His product is amazing, we just need to stabilize the business and that has already begun happening."
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