The Kensie brand has grown to more than $200 million in annual volume from $50 million in just three years.
This story first appeared in the October 27, 2014 issue of WWD. Subscribe Today.
That’s indicative of how far Kensie has evolved since its acquisition in October 2011 for an undisclosed amount by brand management firm Bluestar Alliance from the former Liz Claiborne Inc., now renamed Kate Spade & Co.
Kensie is part of the young contemporary space, and offers products primarily in sportswear, accessories and footwear. That changes come spring when it introduces a handbag collection. Bluestar, through its subsidiary KMJ Holdings LLC, is working with G-III Apparel Group Ltd. as its long-term licensing partner for the sportswear, dress, suit, activewear, sweater, and handbag lines. Through other licensing partners, the Kensie brand also has collections of intimate apparel, outerwear, sleepwear, eyewear, fragrance and home.
Ralph Gindi, Bluestar’s cofounder, attributed the growth of the brand to G-III and to retailers such as Macy’s Inc. and Lord & Taylor LLC. “The shops-in-shop are key. The Kensie customer has disposable income, she’s fashionable and a repeat customer. Macy’s is very much behind the brand, and the big push has been due to the focus on the creation of shops-in-shop where we can showcase the Kensie lifestyle,” Gindi said.
Eric Karls, who cofounded the brand 20 years ago, is part of the G-III team that watches over the DNA of the Kensie lines. “For us, the biggest areas for Kensie are our dresses, casual dresses, French terry, cut-and-sew tops and our leggings programs. The brand has grown about 10 to 15 percent a year as department stores allocate more space to the young contemporary category and we’ve been the beneficiary of that,” Karls said.
The handbag line will be housed in the handbag department instead of in Kensie shops-in-shop. At Macy’s, it will be in part of the Impulse handbag section.
Retail price points will be less than $100 for bags and totes, with $79 the sweet spot, and clutches between $49 and $89, according to Karls. The spring line will have two deliveries, 25 styles for the first, early-spring shipment and a second one consisting of 25 styles featuring fabrications for summer. Prices for the bags are “on par” with the apparel lines, Karls said. Dresses range from $59 to $89, although some are at $129, while sportswear, tops and sweaters average $39 to $49 at retail. The overall Kensie line is in 600 department-store doors and 400 specialty stores. Karls said the fastest-growing component is dot-com for the brand, accessible at the retailers’ host sites.
Discussions are under way for freestanding Kensie stores in key U.S. cities — although Bluestar would need to find a retail operator — within the next 12 months, a mobile app, and international expansion through a licensing partner for monobrand stores in 2015, Gindi said.
Given the smaller scope of the brand’s presence while under the Liz Claiborne umbrella, what was it about the brand that attracted Bluestar’s attention? “We were very impressed with the design and merchandising talent that Kensie had built. It was the right timing for a young contemporary brand to gain momentum. We identified Kensie as a brand with a modern and diverse mix of trends, with a touch of playful charisma. Timing was key to our acquisition: retailers were looking to build the young contemporary space and we had begun to search the market for a brand that could talk to a 20- to 35-year-old customer,” said Gindi, noting that he and Bluestar cofounder Joseph Gabbay did their due diligence, including focus-group research, as well as identifying a framework for expansion via licensing before pursuing the acquisition.
Gindi acknowledged that “it’s tough now to find good brands” that fit Bluestar’s criteria. Founded in 2006, Bluestar has committed capital from high-net-worth individuals that it can tap for acquisitions, although the tendency is to work with different limited partners for each acquisition. While it can do an acquisition with a transaction value of up to $200 million, most purchases of intellectual property assets to date range from $10 million to $50 million.
According to Gabbay, Bluestar is focused on consumer brands. “Once we identify a white space in a segment of the market, we ask ourselves a handful of questions. First and foremost, is the brand recognized at the retail and consumer levels? If we were the brand owners, what can we do to enhance the bond between the consumer and the brand? Can we improve the shopping experience along the way? Can the brand translate into categories beyond their core competencies? Once an acquisition target passes the initial litmus test, we do a full blown-out market and research study to understand the potential of the opportunity.”
The company has had success with brands in the moderate distribution channel, but is also eyeing firms higher up on the fashion food chain. In August 2013, Bluestar acquired a majority stake in the Catherine Malandrino brand.
In addition to Kensie and Catherine Malandrino, Bluestar’s umbrella of brands includes English Laundry, Kooba, Mac & Jac and Joan Vass. It also once owned a stake in Liz Lange Maternity, which was sold in 2012 to Cherokee Inc.