By and  on August 26, 2010

Kellwood Co. has inked a deal to acquire Adam, the six-year-old contemporary sportswear brand for men and women.

Terms of the transaction were not disclosed. Adam founder Adam Lippes will stay on at the brand.

In comparison to earlier deals such as Vince in October 2006 and Isis in January, Michael Kramer, chief executive officer and president of Kellwood, said Adam’s volume falls between the two.

“When we acquired Vince, it had annual wholesale volume of $30 million to $35 million. It will do $110 million to $115 million this year. We’re looking for more Vinces — firms in the upper and moderate price points that have room for growth as a brand. You can control your brand better in a wholesale environment, and you can complement your wholesale with other distribution channels in e-commerce and retail,” Kramer said, adding that Adam’s annual wholesale volume is around $20 million.

Lippes, who started his career at Polo Ralph Lauren in 1995 before working as creative director at Oscar de la Renta from 1996 to 2003, launched his own label, which was then known as adampluseve, in 2004. It offered an underwear-sportswear hybrid brand with a+dam for men and a+eve for women.

Transforming it into a full contemporary sportswear brand, the designer, who serves as creative director and ceo, renamed the brand as Adam Adam Lippes in 2007. Since then, it’s been rebranded as just Adam, with three freestanding stores. The line is also available at shopadam.com, and in more than 250 stores in 10 countries, including Intermix, Bergdorf Goodman, Neiman Marcus, Net-a-porter.com, Jeffrey New York, Harrods in London and Tsum in Moscow.

In 2007, Lippes found a financial investor in The Atelier Fund, founded by Marty Wikstrom and Dawn Mello and having as its principal investor Compagnie Financière Richemont SA. At the time, sources said Atelier paid about $9 million for a 49 percent stake in the brand.

“At this point, we have grown so much, even through such a hard economy, and I was looking for someone I could be synergistic with, someone who could help us take Adam to the next level…with more production, better sourcing, and retail and wholesale expansion worldwide,” Lippes said.

He declined to discuss the terms of the deal but said Kellwood purchased the company from him and Atelier. Atelier did not return calls for comment.

As for his plans, Lippes said he was working on two secondary lines and expects to unveil details about them in January.

“I am looking forward to really integrating with Kellwood and everything they know how to do so well,” he said. “I think the scope of the business will change dramatically.

“Mike and I feel very strongly about freestanding retail, and I think we will really focus on that,” he added.

The acquisition is the latest in what Kramer described as an expansion strategy at Kellwood. Sun Capital Securities Group, a subsidiary of Sun Capital Partners Inc., purchased Kellwood for $762 million in February 2008. The acquisitions are structured so that Sun provides the funding, but it’s booked on Kellwood’s balance sheet.

Brian McGee, vice president at Sun Capital, said of Kellwood, “They have an excellent team, and we’re excited about their prospects on the organic side and on the acquisitions side.”

McGee said the two “work in tandem, and Sun provides resources when necessary.” Although Sun also helps with the due diligence, he said, “The Kellwood team decides on what they think is a good fit. Sun will provide input on structure and strategic direction.” Opportunities can arise either through queries to Sun or Kellwood.

There’s more to come.

Hot on the acquisition trail, Kramer said he spends about 50 to 60 percent of his time talking to brands and determining whether they would be a good fit under the Kellwood umbrella.

“Does the brand have growth potential? Does it have broad appeal to consumers? For us, we believe this is the right time to buy. The hardest part is not about the capital markets but whether the business or talent can take the brand to the next level when they partner with us,” Kramer said, regarding his key criteria for acquisition candidates.

“I want a portfolio with four or five embryonic brands that we can nurture and foster and hopefully help it become big. If I get one or two that hit it big, that would be a good batting average,” Kramer explained.

He’s been looking at firms with annual volume between $200 million and $300 million, as well as smaller firms similar to Adam. What Kramer is looking to do is marry Kellwood’s core operating expertise with great creative talent.

“If you can do that, you’re unstoppable…. Fasten your seat belt. We’re just getting started,” Kramer said.

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