NEW YORK — Pentland Group is building up its apparel business and it can’t come soon enough for chairman Stephen Rubin.
“I have been trying to get away from footwear all my life,” said the affable executive, who built his London-based company into an international powerhouse with a stable of footwear, sport and fashion brands.
In a wide-ranging interview at the Four Seasons here, Rubin also shared his views on the pending acquisition of Reebok by Adidas for $3.5 billion in cash.
“This is the cleverest thing Paul [Fireman] has done in his life,” said Rubin, referring in part to the more than $600 million Reebok’s chief executive officer is expected to receive from the sale.
Rubin is in a good situation to comment on the merger, since Pentland had a large stake in Reebok for more than 20 years, and in the Nineties the firm planned to acquire Adidas before that bid was withdrawn. Over the years, Rubin also was on the boards of both companies.
“There are very few synergies between these two companies and the cultures are so different,” he said. “I think Reebok will probably benefit the most, since they will get added support. Everyone talks about synergies of size. But if a company already has 100 percent capability of a factory, you have to wonder what that will add. From our point of view it is terrific, since there will be more opportunities for us and for niche brands.”
Rubin was referring to the fact that the U.S. athletic industry’s second- and third-largest brands — Adidas and Reebok — will now be part of the same company and some retailers will likely seek out brands that are smaller and have more nimble operations.
Rubin has been in the U.S. this week meeting with Pentland’s various distributors. Pentland’s holdings include Speedo, Ellesse, KangaRoos and Kickers, and it also has the worldwide license for Lacoste and Ted Baker footwear. The international brand management company also has other business holdings in food chains and soft drinks, which are operated under the larger Pentland Groups plc umbrella.
The company has a complicated structure, since it often tailors its business arrangements based on the situation: in some cases, it owns the distributors for its brands, while in other situations it has a stake in the companies it works with or it licenses the brand outright.
Rubin, who also sits on the board of Lacoste, said apparel accounts for about half of Pentland’s business, and is a growing focus in the U.S. To that end, the firm earlier this year took a 50 percent stake in Avon, Mass.-based Atsco Brands, formerly Atsco Footwear, to oversee the expansion of the Ellesse and KangaRoos brands in the U.S. Atsco is the U.S. distributor of those brands and also owns the rights for all categories for both brands here.
“We are not in a rush with these brands,” Rubin said. “We want to grow them the right way and we are in it for the long haul. We believe in controlled growth.”
Atsco is best known for its footwear. As an equal partner, Pentland is helping facilitate its growth in apparel because the distributor deal with KangaRoos and Ellesse marks Atsco’s first venture into this category. For two years, athletic industry executive Maria Stefan has been president of Ellesse USA, but she will be leaving at the end of the year. Stefan, who spent 21 years at the Sporting Goods Manufacturers Association prior to joining Ellesse and has served on a number of industry boards and organizations, told WWD she is looking for new opportunities and is also interested in possibly buying a company.
“We have built the platform for Ellesse and in the last two years we have doubled sales and increased margins,” said Stefan.
Atsco Brands president Alan Colman said his company is in the midst of hiring a team to oversee sales and marketing to develop the apparel business.
The Ellesse brand has been evolving and the new direction will include more stylish products based on the company’s Italian heritage. The new direction will be felt more next fall and in spring 2007, Colman said.
“We are targeting higher-end department stores and specialty boutiques,” he said.
Between footwear and apparel, Ellesse is now sold in about 500 stores, including tennis specialty shops and country clubs, as well as footwear locations.
Atsco relaunched KangaRoos in footwear two years ago and the retro brand hopped into apparel for the first time this fall. It is primarily a junior sportswear line and includes products such as tracksuits, logo T-shirts and velour miniskirts.
Atsco is also putting the finishing touches on a showroom that will open in December at 530 Seventh Avenue here to showcase KangaRoos and Ellesse merchandise.
The Atsco investment is one of many ventures Pentland has in the U.S. and around the world. Rubin said his company now has wholesale sales of $550 million in the U.S., with Speedo comprising the largest chunk of that. Pentland Group overall has sales of about $2 billion, according to published reports.
“We are in a better position than many other companies because we are private and we can grow things slowly,” Rubin said.
In the U.S., Speedo is marketed and distributed by Warnaco Group, which has a perpetual license for the brand. After some rocky times with former Warnaco chairman Linda Wachner, Rubin said he is pleased with the Speedo team now in the U.S., which is led by Roger Williams, group president of Warnaco Swim Group.
“We are very happy with how everything is going with Warnaco now,” Rubin said.
Pentland recently acquired a controlling stake in JD Sports, a U.K. firm with about 350 stores that sells brands such as Nike and Adidas, as well as Pentland-owned labels. Rubin said the company isn’t planning to begin a retail business in the U.S., but would like to open a select number of flagships here for some of its brands, including Franco Sarto, which is now distributed in the U.S. by Bennett Footwear. Rubin also said his firm is looking to bring some of its other brands here, including Berghaus, which makes shoes for outdoor activities as well as outdoor apparel.
The continued growth of Pentland is being overseen by Rubin’s son, Andy, who was named ceo in 1998. Over the years, Stephen Rubin has been active in numerous sporting goods industry associations and is currently chairman of Manchester 2008, the company formed to host the 2008 World Short Course Swimming Championships.
As Pentland’s chairman, Rubin said he is still actively involved in the firm and travels often on behalf of the brand.
“My wife likes to go away, but everywhere we go, we see Speedo,” Rubin quipped. “It’s sold in 176 countries now.”