NEW YORK — Kellwood Co. is in discussions with Johan Lindeberg to transfer ownership of BLK DNM, a move that would have the apparel firm retaining a stake in the business if an agreement is reached.

This story first appeared in the May 23, 2012 issue of WWD. Subscribe Today.

The negotiations involve the brand, stores in Stockholm and New York City and employees connected with the brand, according to Jill Granoff, Kellwood’s chief executive officer, in an interview Tuesday along with Marc J. Leder, Sun Capital Partners’ co-ceo, at Sun’s offices here. Granoff took over the ceo post earlier this month. An affiliate of Sun Capital acquired Kellwood for $762 million in February 2008.

While Lindeberg was known to be looking for an investor to help him take over and grow the BLK DNM (pronounced Black Denim) label, rumors surfaced in the past week that the business would be shuttered.

“We are not shutting it down,” Granoff emphasized, and confirmed that Lindeberg has indeed found a partner. The identity of that partner could not be determined at press time. Lindeberg declined comment.

He conceived the concept, a line featuring a European design aesthetic inspired by the culture of New York’s downtown community, and joined Kellwood in September 2010 as creative directive of BLK DNM to partner with the firm to bring his idea to fruition.

Granoff, who is just three weeks into her new job, said she is still meeting with the team at Kellwood and is in the early stages of putting together a business plan.

In the past, there was some discussions of possibly doing an initial public offering of Kellwood at some point down the road. While Sun Capital in the past has exited its investments via an IPO — it did that with value-priced department store retailer Gordmans Stores Inc. in August 2010, where it retained a stake, with Gordmans currently planning on a secondary offering — it has sold some investments as well.

“It really depends on the company. We’ve generally been more sales oriented, but with Kellwood it could go either way,” Leder said.

Granoff said she’s going to focus her resources on businesses that have the “greatest growth potential.”

If an IPO is a possibility, the company would likely be eyeing businesses that move the needle, more so than in a regular sale since it’s going to have to tell a good growth story for its road show to investors. That raises the question about the future of smaller brands in Kellwood’s portfolio, such as yoga-inspired brand Zobha and outdoor performance brand Isis, which would need capital to grow.

Those are two brands that Granoff still needs to evaluate, although the growth rate of Vancouver, B.C.-based firm Lululemon Athletica Inc. suggests that the athletic apparel market still has room for growth opportunities.

According to Leder, if Granoff concludes that the growth opportunities are there, “We’re happy to support a small brand.”

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