By Lisa Lockwood and Evan Clark
with contributions from Vicki M. Young
 on August 3, 2017
A Vince Camuto ad image.

Aldo and Camuto are hoping size equals strength.

On Wednesday, Aldo Group, based in Montreal, reached an agreement to acquire the footwear and accessories business from Camuto Group, based in Greenwich, Conn. Although the purchase price was not disclosed, the Camuto footwear and accessories business is believed to have fetched about $250 million.

“It’s a fair price, [although] it seems low,” one observer said.

A financier said the transaction needed to get done “because there really wasn’t that much more that could be done to grow the business in its current format.” The source was referring to the passing of founder Vince Camuto and how it was his designs and creativity that drove the footwear business. As for price, the source said it was within range, and noted that the Aldo family is fairly disciplined and wouldn’t overpay for the acquisition.

The acquisition is expected to significantly increase both companies’ capabilities and reach and enhance their ability to offer a wide selection of footwear, handbags and accessories through owned stores, franchises, online and wholesale distribution.

The transaction is another indicator of how important scale has become in the industry — and the big are only getting bigger as they struggle with the rise of e-commerce, fickle Millennials and slowing store traffic.

Aldo joins a host of companies buying to build a larger and more diversified base. Just last month, Michael Kors Holdings Ltd. inked a $1.35 billion deal — including debt — to buy Jimmy Choo, while Coach Inc. brought Kate Spade & Co. into the fold for $2.4 billion in June and acquired Stuart Weitzman for $574 million in 2015. Both Kors and Coach are on a mission to build American powerhouses, replicating the broad-based approach of LVMH Moët Hennessy Louis Vuitton and Kering but tweaking that model by applying it to accessible luxury brands.

Part of the impulse for companies to gather their strength is coming from Amazon, which is expanding its reach or trying to in almost ever consumer-oriented business.

A new report from One Click Retail on Amazon — excluding Zappos — showed the web giant’s total U.S. shoe sales rose 35 percent to $1.6 billion last year, while the broader shoe market grew just 5 percent to $36 billion.

Amazon is coming at the market from a number of angles, having studied the industry intently since its $1.2 billion acquisition of Zappos in 2009. The report noted that Amazon launched private label footwear and accessories brand The Fix last week and pointed to the recent introduction of Prime Wardrobe, a service that lets Prime members try on looks at home before buying them.

“This is a clear indication that Amazon is positioning itself as a major player in the footwear industry at a time when brick-and-mortar stores are struggling to retain customers, with even the major chain Payless filing for bankruptcy,” One Click said.

Nike recently agreed to a pilot program that would help it ensure a crisper presentation of its brand on the Amazon platform. And One Click singled out Adidas women’s sneakers as the biggest driver of footwear on the web site.

No doubt that online pressure gave Aldo some incentive to grab more market share before it slips away.

David Bensadoun, chief executive officer of Aldo Group, and Alex Del Cielo, ceo of Camuto Group, said in an interview that their combined entities will boost Camuto’s international and men’s business, while Aldo will benefit from Camuto’s capabilities in sourcing and wholesale, as well as expertise in the U.S. market.

The two private, family-owned companies compete in different segments of the footwear market. Aldo’s moderate-priced brands, which are distributed internationally mostly through its own stores, are less expensive than Camuto’s trend-driven contemporary and luxury labels, which are mostly distributed through wholesale channels.

Del Cielo believes the acquisition made sense for Camuto, which was founded by the late Vince Camuto in 2001. “We weren’t actively looking to sell it. The Aldo Group approached us. As we kept talking, strategically it seemed like the right thing to do. The [Camuto] family was behind it, and it was really that simple,” he said. Del Cielo will remain in his role and will report to Bensadoun.

According to the agreement, Aldo will acquire Camuto’s footwear and accessories business, which includes its branded, licensed and private label operations. In addition to its directly owned Vince Camuto, Two by Vince Camuto, Imagine by Vince Camuto, Louise et Cie and Enzo Angliolini brands, Camuto has licenses for Jessica Simpson for footwear and Lucky Brand for footwear and handbags. It also has design and sourcing deals with Alice + Olivia and Rebecca Minkoff and sources some of Tory Burch Footwear. In addition, it has joint ventures with ED Ellen DeGeneres and Mercedes Castillo for high-end footwear. Camuto also does private label for such retailers as Dillard’s and Ann Taylor.

Camuto will retain its Bernard Chaus Inc. apparel business, which makes sportswear and dresses under the Vince Camuto, Chaus, Two by Vince Camuto, One State and other labels. Chaus acquired Bernard Chaus Inc., which is headed by ceo Ariel Chaus, in 2015 and it remains a stand-alone company that operates at 530 Seventh Avenue.

Camuto will continue to run independently and will retain its Greenwich headquarters and Manhattan sales showroom at 1370 Avenue of the Americas, Del Cielo said.

“When you look at the businesses strategically on paper, it looks like a beautiful fit. Once we get government approval, then we can really start looking at the businesses and figure out what the best way to run it will be,” said Del Cielo, who assumed the ceo role following Vince Camuto’s death in 2015 at the age of 78.

Asked whether the Aldo-Camuto combination was a move to get bigger and compete more effectively with Amazon and other behemoths, Bensadoun said, “I’m not sure about that. In our case, we really saw this as a way to grow. We own two brands [Aldo and Call It Spring] that we’re very proud of, that we’ve grown internationally. And we do a fair bit of private label work for such customers as Kohl’s, DSW, Target and Gap. We made a decision about 18 months ago that we wanted to grow quicker than we would be able to grow organically. Financially, we were in a position where we could make an acquisition. That’s really where it came from. It was a desire to grow and create opportunities for our team to be able to compete better on an international scale,” he said.

Only one-third of Aldo’s sales are derived from the U.S. One quarter is done in Canada, and the balance is international, he said. “When you look internationally, there are some incredible markets that are growing very quickly. And there’s so much opportunity. There’s a limit to how much we could maximize with only our two brands. We feel that now we have many different things that we can bring to the markets,” Bensadoun said.

What he found most appealing about Camuto was the fact that they have some great brands. “The Vince Camuto brand is terrific, they have some great licenses, like Lucky. Really what we loved was the management team. They have a deep bench of design and product, and they have a world-class sourcing engine,” Bensadoun said.

Further, he said, Aldo is “world class at synthetic fashion footwear sourcing,” and Camuto is “world class at leather footwear sourcing.” Aldo is also very strong in men’s, and Camuto doesn’t do much men’s. “There’s a nice opportunity there for us to help their brand in men’s,” he said. Aldo does most of its manufacturing in China, Vietnam and Portugal, while Camuto does most of its production in China, Brazil and Portugal.

According to Bensadoun, only about five percent of Camuto’s sales are international. “Our big focus will be bringing the Camuto brands international. That’s really where we see the biggest opportunity. It’s much less of a U.S. market play than an international play,” he said.

As far as the market segments they compete in, Bensadoun said Jessica Simpson’s price points overlap with some of what they do at Aldo and Call It Spring. “All the other Camuto brands are above Aldo pricing,” he said. For example, the sweet spot of Aldo’s ladies pumps is $90, while Vince Camuto pumps retail for $110.

“We’re buying Camuto because we love their design and sourcing abilities, and we’re going to keep them as it is,” Bensadoun said. “This is really about creating new opportunities. It’s not about cost-cutting. We’re a private, family-owned business and I think the best part of the story is one private, family-owned business buying another private, family-owned business. That’s pretty rare in 2017,” he said.

Bensadoun believes the companies will be able to help each other. “We’ll be able to help them with men’s and international, and they’ll be able to help us with wholesale and with leather sourcing,” he said. E-commerce represents about 12 percent of Aldo’s retail sales, and is strong for Camuto, as well, he said. Aldo has 2,600 stores globally under the Aldo and Call It Spring banners. Bensadoun said Aldo’s revenues are about $1.5 billion.

As to whether all Camuto’s licensees have agreed to the new ownership, Bensadoun declined to comment. He explained that they’re in the antitrust period now, and the deal hasn’t closed. Del Cielo added the response from his licensees has been great. “We don’t see any issues in any of our contracts. Obviously we have partnerships with people,” he said. (BCBG Max Azria ended its licensing deal with Camuto on Dec. 31, 2016.)

Deanna Berkeley, president of Alice+Olivia, said, “We chose Camuto Group as our partner because of the high quality of their product and their innovative creative and technical teams. We believe that their strong company values are one reason Aldo acquired them and these values will remain important through this acquisition and beyond.”

Asked if Louise Camuto will stay on as chief creative officer, Del Cielo said, “We haven’t gone that far yet. We came up with terms of a deal. As far as the personnel, we still haven’t gotten there yet.”

“Aldo really excels at retail and Camuto really excels at wholesale. There are a lot of parts that fit nicely together,” he said. Camuto only has a handful of stores. “We just weren’t real successful at retail,” he admitted.

Aldo’s founder, Aldo Bensadoun, now 78, has retired and the company is run by his son, David. But the elder Bensadoun is still involved in the business, which he started in 1972 as a stand within the Le Chateau store in Montreal.

“When you look at Aldo’s career and Vince’s career there are a lot of similarities when they went into business. They just went in different directions. One went retail and one went wholesale. Vince had great respect for Aldo and what he accomplished, and I know from speaking with Mr. [Aldo] Bensadoun, that respect was really mutual,” Del Cielo said.

The financial community appeared optimistic about the deal.

Gilbert Harrison, chairman of Financo Inc., said, “Aldo is a phenomenally run company. They have built up a tremendous brand worldwide and their ability to take Camuto to the next stage should be an extremely positive opportunity.”

Allan Ellinger, cofounder and senior managing partner of MMG Advisors, said, “I think it’s another sign of a consolidating industry. It’s going beyond apparel, it’s really impacting all aspects of our industry. You have two great brands coming together. When you look at the strategy of combining two brands, which can leverage off of a smaller overhead and shared services, it makes so much sense in today’s marketplace, as long as the brands complement each other and don’t cannibalize each other.”