Who would be one of the largest US apparel makers? Kellwood would. The firm generates most of its sales from women's wear, including its Koret and Sag Harbor lines. It also produces men's and children's clothes and accessories. Its portfolio of about 20 brands also includes My Michelle, Baby Phat, Phat Farm, Rewind, Vince, and XOXO. The company is a major supplier to department stores, as well as mass retailers, specialty boutiques, and catalogs. Kellwood also operates Vince and Sag Harbor brand outlet stores across the US. The company was taken private in 2008 by Sun Capital Partners and has been restructuring its operations.
Kellwood became a portfolio company of the private equity firm -- and its largest investment -- in Sun Capital's second run at the apparel maker. (Kellwood had rejected a previous offer made in late 2007.) The purchase price was $542 million, about the same amount as the first offer. To take its business forward, Kellwood has shaken up its leadership, exited licensing deals, and unloaded non-core brands. The moves are aimed at boosting the company's revenues and promoting further growth through acquisitions of key apparel interests.
Breaking with the past, Kellwood in mid-2008 installed retail veteran Michael Kramer as president and CEO of Kellwood, succeeding Robert Skinner. Kramer hails from Abercrombie & Fitch, Apple Retail, and The Limited, among other firms. He is charged with restructuring Kellwood and has been cutting its less profitable private-label and small-volume business while dealing with the effects of a heavy debt load and a sharp drop in consumer spending amid the deep US recession, both of which have hurt Kellwood financially.
Following Kramer's appointment, Kellwood began casting off operations that had few synergies with its women's wear portfolio. In late 2008 its Gerber Childrenswear and Hanna Andersson kids-centric apparel businesses were sold to Childrenswear LLC, an affiliate of the private equity firm, for $179 million. Sun Capital stepped in to separate Kellwood from its outdoor gear and apparel division American Recreation Products (which includes the Royal Robbins clothing brand), establishing it as a stand-alone company. It also ceased operating the Hollywould brand, a collection of upscale contemporary women's footwear and handbags, after failing to find a buyer. In addition, Kellwood exited many of its licensing deals, including agreements with Accessory Network Group, Calvin Klein, Liz Claiborne, and PVH.
Kellwood is poised for growth after paring back its portfolio to about 20 key brands. In early 2010 the firm secured a $140 million line that will be used to fund operational costs, freeing it up to focus on purchases. Indeed, in the past decade the company has gained a foothold in new niches and grown through acquisitions, including Vince, Briggs New York, and Phat Fashions. Kellwood is focusing on firms that have a high growth potential in multiple retail channels (like bricks-and-mortar stores and e-commerce) and possible lifestyle extension elements (like accessories). To this end, Kellwood in early 2011 acquired Rebecca Taylor, the contemporary sportswear brand named for the New Zealand designer, which is distributed in more than 40 countries worldwide. Later that year Kellwood broke into activewear, purchasing California-based yoga and fitness apparel maker Zobha, and it bought high-end casual apparel brand Scotch & Soda of Amsterdam. Previous purchases include sportswear brand Adam, which was founded by Adam Lippes and is sold through retailers Bergdorf Goodman, Neiman Marcus, and Harrod's, as well as via shopadam.com and a handful of Adam retail stores in August 2010. The luxury line, aimed at men and women, will allow Kellwood to expand its business across major product categories and international markets. (In late-2011 Kellwood announced it will no longer fund the Adam business and is considering all strategic alternatives for the brand.)
Wal-Mart and Kohl's are two of Kellwood's largest customers. Many of its brands (such as Jolt, Vince, and David Meister, to name a few) are also marketed by better department stores, including Nordstrom, Barneys, Bergdorf Goodman, and Saks Fifth Avenue.