NEW YORK — Consolidating the fashion industry isn’t just a game for the giants, such as Jones, Liz Claiborne and Kellwood.
SML Sport, which is projecting a wholesale volume of $50 million this year, also has been snatching up brands, including Belly Basics and Lauren Hanson, in an effort to grow.
“We’re building an empire and I’m the empress,” Katarina Dal Piaz, president of SML Sport, said in an interview here.
The empire-building seems less an act of hubris than of necessity.
Smaller vendors such as SML increasingly have been squeezed by stores’ private label programs and fashion’s top vendors, such as Jones Apparel Group, Liz Claiborne Inc. and Kellwood Co., which have made a parade of acquisitions carrying price tags of more than $100 million.
SML started 25 years ago with its signature moderate knit line. As private label merchandise gained prominence, “this whole moderate thing fell apart,” Dal Piaz said. “I began to look for some more branded lines.”
Stores have moved more toward private label goods, which they produce themselves, to differentiate their offerings and capture margins that would have gone to the vendor.
Sales of private label sportswear in department stores rose 16.1 percent last year to $1.5 billion, according to STS Market Research. STS tracks the purchases of more than 12,000 consumers and extrapolates the performance of the overall market.
Expanding into product categories through the acquisition of branded businesses is a way for smaller firms to widen their base and weather an increasingly competitive industry.
SML, which stands for small, medium, large, began its move from a small to medium-size player in 2000 with the acquisition of Lauren Hanson, a misses’ knit collection.
Reconfigured for the contemporary customer and relaunched last fall in 550 specialty doors and some department stores, Lauren Hanson features knits in several fabrics, including cashmere and micronylon, as well as silk-cashmere and rayon-nylon blends.
SML has made two recent acquisitions and signed a license for a better-priced women’s line under the Cubavera name.
Dal Piaz said the acquisitions were financed internally. SML looks for its acquisition targets to have more than $5 million in sales.“Buying smaller brands, and hopefully with some competent management, is a good way to build a business,” she said.
SML snatched up the better maternity line Belly Basics in November from its owners and is relaunching it for fall in specialty and department stores, as well as online. The line includes two kits with four pieces for the expectant mother, such as a skirt, dress, top and pants. Belly Basics also has T-shirts, bathing suits, sweaters, diaper bags and Belly Balm, a lotion for growing bellies. A lower-priced secondary line, called 9 Months, is also in the works.
In January, SML acquired Shenanigans, a moderately priced novelty T-shirt and sweater business. SML picked up the back-end, administrative part of the business, leaving the design and sales portion intact.
The company signed a license in January with Perry Ellis International for a Cubavera better contemporarysportswear collection, which will be launched for spring 2005. The brightly colored line, aimed at the Hispanic market, will be the little sister to the established men’s line and will feature ruffles and bright prints to achieve a sexy, but not overly so, look.
SML, which is looking for these businesses to help increase sales by 20 percent in 2005, has two other deals in the works and on Monday signed a lease for new offices at 512 Seventh Avenue.
That could be it for a while because Dal Piaz said SML would need time to digest its new businesses.
“It’s very difficult to continue to grow organically for any kind of company,” said Andrew Jassin, managing director of the Jassin-O’Rourke Group, an apparel consultancy here. He said these kinds of deals let firms get more mileage out of their back-end resources, spread the risk among several brands and take advantage of expertise.
Consolidation on this scale is “constantly happening for both financial and strategic reasons,’’ Jassin said.
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