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, licensing the Bongo and Le Tigre brands. Kenneth Cole licenses its name for hosiery, luggage, watches, and eyewear. It continues to expand, adding new lines for women and children, as well as fragrances. About 5,500 department and specialty stores carry its products. Kenneth Cole operates about 110 retail and outlet stores and sells through catalogs and websites. Chairman Kenneth Cole owns about 47% of the company and controls 89% of the voting rights. He has proposed to take the company private.
In February 2012 Cole offered to acquire 100% of the company's outstanding publicly held shares of common stock. As part of the transaction, stockholders would receive $15 per share in cash, valuing the total equity of the company at about $280 million and Cole's offer at some $148.5 million. Cole anticipates raising additional funds as necessary from committed third parties and 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. When highly regarded Jill Granoff resigned abruptly in early 2011, the move piqued the curiosity of those who follow the company. Granoff had joined Kenneth Cole as its chief executive in mid-2008. Previously an executive with Liz Claiborne, Victoria's Secret Beauty, and The Estee Lauder Companies, she brought expertise in specialty retail and wholesale operations. Without having full control over the company, however, it's likely that Granoff had grown frustrated. Following Granoff's departure, vice chairman and former Kenneth Cole president Paul Blum was tapped as CEO.
Kenneth Cole has been able to ride out the recession, thanks to its decision to purge items from its products portfolio. Within its wholesale unit, which accounted for 49% of its 2009 revenue, the apparel company exited its Tribeca and Bongo footwear lines and saw reductions among its private-label programs and off-price customers. All this contributed to a more than 25% decline. The company's licensing segment, which brought in 10% of sales in 2009, logged a sales decline at around 10%, thanks to fewer customers inking contract initiation fees.
The company's consumer direct segment, which contributed 41% of 2009 sales, also saw its revenue slip. Looking at about a 7% decline, Kenneth Cole attributes this to selling more discounted products at outlet stores. During 2009 the retailer opened 19 outlets but shuttered five full-priced retail stores. The company's cost-cutting efforts, however, were not enough to offset the sales declines, and Kenneth Cole suffered its second consecutive year of net losses.
To get back into the black, Kenneth Cole plans to continue its cost-cutting efforts, and hopes to boost its future revenue through a strategic alliance with Macy's. In 2010, the company inked a deal with the department store retailer 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 new line in the US and its territories. Kenneth Cole rolled out the collection in fall 2010 initially in 150 stores and ultimately to 550 stores.
The company's goods are made outside the US by contractors in Brazil, China, Italy, South Korea, and Spain. Its men's and women's fragrances are made through a strategic alliance with Coty.
The company's merger talks with brand management firm Iconix Brand Group have stalled. Iconix is run by Cole's brother Neil. Iconix's 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.