Kenneth Cole Productions has ended its five-year licensing agreement with Bernard Chaus Inc. for the Kenneth Cole New York women’s sportswear collection, effective June 1, and will take the line in-house.
The Chaus agreement was scheduled to expire in June 2012.
“Josephine Chaus and the organization have done a great job in building our women’s sportswear into one of the best-performing businesses in better department and specialty stores,” said Jill Granoff, chief executive officer of Kenneth Cole. “We have made the strategic decision to bring women’s sportswear in-house to leverage our existing capabilities and build our women’s business. We intend to invest the resources required to realize the growth potential we believe exists in the wholesale, retail and international channels.”
Granoff explained that Kenneth Cole has been designing, developing and sourcing women’s sportswear in-house for the product that is sold in its own stores, outlets and online. The Kenneth Cole New York collection, developed by Chaus, was primarily geared to department and specialty stores such as Nordstrom, Lord & Taylor, Bloomingdale’s, Dillard’s and Belk, with some carried in Kenneth Cole stores.
Kenneth Cole will start making all the women’s merchandise, beginning with the fall 2011 season. Chaus will manufacture and market the line through spring 2011.
Going forward, the entire Kenneth Cole New York collection will be under the design supervision of Ingo Wilts, senior vice president, creative director of Kenneth Cole. Wilts joined last year from Hugo Boss, where he was senior vice president and creative director. Granoff said she will continue to target the Kenneth Cole New York line, which has a modern design sensibility, to better sportswear departments. She’s also looking to capitalize on overseas opportunities. The line is currently sold in House of Fraser in the U.K. and stores in Canada.
At Chaus, the Kenneth Cole New York line generated in excess of $50 million annually.
“I am proud of the job we have done in building the Kenneth Cole New York women’s sportswear line,” said Josephine Chaus, ceo of Bernard Chaus. “We are pleased to have reached favorable terms with Kenneth Cole Productions to recognize our contributions to this business and to enable us to explore new opportunities for the future. In the coming days, we do expect to announce a new license agreement that will provide us the opportunity to replace the revenues of the Kenneth Cole license with a brand that is well known to the trade and enjoying growing success with its target consumers.”
Tonight, Macy’s is launching an exclusive partnership with Kenneth Cole for a men’s Reaction line. The Reaction line will roll out to 200 doors this season, and ultimately will be distributed in 500 Macy’s doors. The Reaction line features clothing and accessories for “all wear occasions,” ranging from tailored clothing, footwear and briefcases to casual sportswear for the weekends, said Granoff. Reaction is priced 20 to 30 percent below Kenneth Cole New York. “The difference is not the price point. It’s the life stage,” said Granoff, explaining that Reaction is geared to the young man who’s just graduated from college, and as he gets older, he moves into the more sophisticated Kenneth Cole New York arena. Granoff said a women’s Reaction line for Macy’s “could be a possibility.”
Kenneth Cole swung to profitability in the second quarter ended June 30 and reported income of $937,000, compared with a loss of $3.3 million in the same period a year ago. Total revenues increased 15 percent to $108 million from $93.9 million, and sales gained 14.3 percent to $96.9 million from $84.7 million. Sales included a 12.8 percent jump in wholesale and a 16.2 percent rise in direct-to-consumer sales. Comparable -store sales gained 8.4 percent. All the company’s businesses — wholesale, retail and licensing — showed double-digit growth in the second quarter. “We’re projecting a good third quarter,” said Granoff.
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