Kenneth Cole is a trendy old sole. Known for its shoes, Kenneth Cole Productions makes stylish apparel and accessories under the Kenneth Cole New York, Kenneth Cole Reaction, Unlisted, and Gentle Souls names. Kenneth Cole licenses its name globally for hosiery, luggage, watches, and eyewear. It continues to expand, adding new lines for women and children, as well as fragrances. About 4,700 department and specialty stores carry its products. Kenneth Cole operates about 100 retail and outlet stores and sells through catalogs and websites. Chairman Kenneth Cole, who effective September 2012 owns the namesake company, took Kenneth Cole Productions private through a merger with his KCP Holdco, Inc.
Change in Company Type
In early 2012 Cole had offered to acquire 100% of the company's outstanding publicly held shares of common stock. As part of the transaction, stockholders received $15 per share in cash, valuing the total equity of the company at about $280 million and Cole's purchase at some $148.5 million. At the time, Cole anticipated retaining the company's current management team. In addition to being chairman, founder Cole serves as chief creative officer, having control over design, product, brand positioning, and advertising. Company namesake Cole is said to be a micromanager who closely controls costs and keeps a tight rein on the decision-makers at the apparel and footwear manufacturer.
Looking to diversify its revenue stream and boost sales for the long term, the upscale retailer plans to open Kenneth Cole New York stores in India through an agreement inked in late 2011 with Reliance Brands. The company's products also will be sold through other department stores in India. Five stores are slated to open by 2015, with another 20 more through 2020. Like other retailers and manufacturers, Kenneth Cole is lured to set up shop in India for its consumers' improved standard of living and overall loyalty and attraction to top brand names.
Kenneth Cole has purged items from its products portfolio, launched new lines, and mended its longtime licensing agreements as a way to ride out the recession. Its wholesale unit, which grew from 49% of sales in 2009 to 56% in 2011, exited its Tribeca and Bongo footwear lines and saw reductions among its private-label programs and off-price customers. Growth in wholesale can be attributed to the 2011 launch of Kenneth Cole New York women's sportswear and to more doors ordering Kenneth Cole Reaction men's sportswear. Its wholesale segment also saw sales increases across all product divisions, particularly in footwear, handbags, apparel, and international. Wholesale is picking up the slack for its lagging consumer direct business, which has slid from 41% of sales in 2009 to 34% in 2011. During the economic downturn, the company sold more discounted products at outlet stores and its network of stores dwindled by about a dozen locations. Royalty revenue increased slightly (1.4%) in 2011 due to raised royalty minimums from licensees, even with Kenneth Cole terminating its Bernard Chaus women's sportswear license in 2011 and its Le Tigre license with JC Penney in 2010.
Kenneth Cole hopes to boost its future revenue further through its strategic alliance with Macy's. The company inked a deal with the department store retailer in 2010 to launch a new men's sportswear collection under the Kenneth Cole Reaction label. As part of the agreement, Macy's is the exclusive department store retailer for the line in the US and its territories.
The company's goods are made outside the US by contractors in Italy and China, among other locations in Europe and Asia. Its men's and women's fragrances are made through a strategic alliance with Coty.
Sales and Marketing
The company markets its products to about 4,700 domestic department and specialty stores; its own full-priced retail, outlet, and online stores; and internationally through licensee partners and international retailers. Kenneth Cole operates in Asia, Europe, and the Middle East.
Macy's accounted for 11% of 2011 sales. In 2009 and 2010, no customer generated more than 10% of sales.
Chairman Kenneth Cole took his namesake company private in September 2012 through a merger with his KCP Holdco, Inc.
The company's past merger talks with brand management company Iconix Brand Group have come to a close. Iconix is run by Cole's brother Neil. Its portfolio of brands include Candies, Mossimo, Peanuts, Cannon, Waverly, among many others. Kenneth Cole was first reported to be considering a sale to Iconix in September 2010.