DSW’s decision last week to team with Authentic Brands Group (ABG), on the acquisition of the operations and intellectual property rights of the 17-year-old Camuto Group in a $375 million deal slated to close in Q4, is part of a broader strategy to expand its reach in footwear with both consumers and other retailers.
“Following the acquisition, our business model evolves from one that is 100 percent focused on North American retail to a model with new revenues from wholesale, licensing royalties and investment income,” DSW CEO Roger Rawlins told analysts last week. “Furthermore, it diversifies our business by increasing our exposure outside the moderate channel to improve department stores, regional chains, independent boutiques, pure play online and digital marketplaces.”
The complex transaction will bring DSW’s annual topline close to $3.5 billion after it pays $200 million for Camuto’s operations and $56 million for a 40-percent ownership in an IP joint venture with ABG. The deal also gives DSW the resources to manufacture high-quality men’s and women’s shoes in Asia. DSW will also acquire the licensing rights for Jessica Simpson footwear, the Lucky Brand and Max Studio footwear and handbags and joint venture (JV) participation in the Ellen DeGeneres and Mercedes Castillo brands.
From the transaction, DSW sees its four largest “buckets of growth” coming from other shoe retailers—Dillard’s, Nordstrom and Macy’s among them—in growing their respective footwear businesses; more private label product for DSW which currently generates only about 10 percent of revenues; licensing royalties through its relationship with ABG; and Direct-To-Consumer expansion.
Once the transaction closes, DSW is vowing to “go slow” out of the gate as its team learns the Camuto business, makes sure the Connecticut company’s wholesale partners are serviced properly and plots its longer-term strategy for the business. Camuto Group has been profitable over the last year, Rawlins said, but the footwear business has more recently been challenged by supply-chain constraints. DSW’s ownership will help Camuto return to “more normalized” operations over the next 12- to 18-months.
As for ABG, the global brand management company backed by investor Leonard Green, General Electric, David Simon and Chairman and CEO Jamie Salter, the New York company currently oversees 33 brands in the celebrity, lifestyle and sports categories. Among them: Nautica, Tapout, Spyder, Juicy Couture, Marilyn Monroe, Tretorn, Greg Norman and Elvis Presley. ABG brands generate 40 percent of revenues in international markets and over $8 billion in worldwide retail sales from approximately 50,000 points of distribution. The DSW-ABG JV includes the Vince Camuto, Luise et Cie, Sole Society and Enzo Angiolini brands among others and will focus on licensing the brands across existing lines in footwear, handbags and jewelry and new category development.
The 132-year old retailer Sears, which has struggled under mounting debt and slowing sales for years, filed for Chap. 11 bankruptcy protection late Sunday, hours before a deadline to pay $134 million in loans. Ahead of the filing, the Wall Street Journal reported late Friday that the retailer, which hasn’t reported a profit in seven years, would obtain a lifeline of $500 million in emergency financing enabling it to keep open approximately 300 locations through the upcoming holiday season. Under bankruptcy protection, Sears intends to close 142 stores by Dec. 31 on top of 46 set to close by Oct. 31. The fate of another 250 stores would be determined after evaluations. Hedge fund ESL Investments, owned by Sears’ Chairman Edward Lampert, is the “stalking horse” bidder to purchase an unspecified portion of the retailer’s real estate.
Sears hired M-III Partners LLC, a boutique advisory firm, on Oct. 9 as it prepared a reorganization plan. Last week, some investment houses predicted retailers Kohls and Macy’s would be beneficiaries of Sears’ bankruptcy filing.
“It is sad to lose such a historic and household brand such as Sears,” remarked Gavin Bisdee, VP of global marketing for Zynstra, “but they are not the first retailer to fall by the wayside, and they certainly won’t be the last, either. It is important, however, to remember that it is not a barometer of the overall trends in U.S. retail, despite claims of a ‘retail apocalypse’ over the past year. Recent reports clearly show there have been more store openings than closures in the U.S., and sales in physical stores will still account for 80 percent of retail sales by 2021. That said, change must continue to happen in retail. The bankruptcy of Sears only reinforces the importance of adapting fast to the change in consumer buying habits. Those (retailers) that are adapting fast to omnichannel integration, including the use of stores as distribution and fulfillment centers as well as sales outlets, will be the clear winners. In fact, don’t be surprised to see other retailers looking at Sears’ real estate inventory for their own sales and distribution needs.”
Amazon will have to pay more to the U.S. Postal Service for delivery of its packages after the holidays under a proposal submitted late last week. Starting Jan. 27, 2019, costs for traditional parcel delivery, the type most used for Amazon orders and other retailers for fulfillment, will rise 9.3 percent. Meanwhile, the cost of lightweight (under a pound) packages would be hiked 12.3 percent and the cost of a first-class stamp would rise to 55 cents.
U.S. retail sales rose a meager 0.1 percent in September from August, below Street expectations of 0.6 percent gain. Year-over-year sales were up 4.7 percent, according to monthly data from the U.S. Census Bureau. Sales in the sporting goods/hobby/musical instrument/book store channel fell 3.8 percent on an adjusted basis in September and were down 2.7 percent for the first nine months.
Scheels has announced plans to open its second Colorado store, in Colorado Springs, in April 2021. The proposed 220,000-sq. ft. location by the employee-owned is planned for the Interquest Marketplace near the Great Wolf Lodge and will be the chain’s 29th door after two stores are opened in 2020 in Eden Prairie, MN and The Colony, TX.
Dick’s Sporting Goods is opening stores this month in Spokane, WA and Greendale, WI and two Golf Galaxy doors in Dublin, CA and Greendale, WI. The four openings will bring Dick’s store count to 733 across 47 states and Golf Galaxy to 96 locations. Also, last week, DKS inked a multi-year extension to its partnership with Pittsburgh-based First Insight, which has assisted the retailer for the last three years with predictive analytics for its design, buying and pricing decisions.
Customers at L.L. Bean’s store in Mansfield, MA over the weekend, drawn to the store by its 20-percent off sale on all Bean footwear and apparel through Oct. 15, were lining up to use “Albert,” a retail footwear scanning system introduced last year by Aetrex Worldwide. The round device measures pressure and sizing, conducts 3-D imaging and has the ability to track gait. Built and developed in Israel, the system is equipped with more than 5,000 sensors, 1,000 infrared LED lights and receptors and 18 digital cameras.
Fabrizio Gamberini, previously CEO for Geox USA and a Nike GM, is the new president and CEO of Vibram USA. He is replacing 20-year company veteran Michael Gionfriddo, who is retiring on Dec. 31. Until then, he and Gamberini will work together to ensure a smooth transition at the North Brookfield, MA company. Gionfriddo has been president of Vibram USA since 2011. Separately, Vibram Corp. has appointed Richard Riegel, a company director since 2015 and the founder and CEO of privately-held Airstream 2 Go, LLC, as Chairman.
At Fanatics, former 18-year adidas executive Ignacio Beristain Borra has joined the company to lead retail, buying and merchandising across Southern Europe. Additionally, Bill Tung, with international experience at both Columbia Sportswear and New Balance, joins as Managing Director for Fanatics Branded International, and Ian Nelson, from Pentland Brands, as product marketing director. Meanwhile, Zohar Ravid joins as director of strategy and M&A.
• Duluth Trading Company promotes SVP Allen L. Dittrich to Chief Operating Officer, a new position at the Belleville, WI-based retailer. A retail industry veteran, Dittrich was previously SVP of retail for Allen Edmonds Shoe and a COO and CMO at the former Gander Mountain.
• Outdoor Industry Association (OIA) hires Patricia Rojas-Unger, VP of public affairs for the U.S. Travel Association, as VP of government affairs. She will lead the trade group’s Washington, D.C. office.
• Dynamic Brands, the Richmond, VA parent of seven sporting goods brands, adds customer service, operations and production staff. The company is relocating its production and warehouse operations to Pageland, SC from Monroe, NC in Q1/19.
Allbirds Inc. now has valuation of $1.4 billion after selling new, unspecified equity to investors last week. The San Francisco-based footwear company, which operates stores in its home city and New York, was valued at $370 million when Tiger Global Management invested more than $50 million last year. Co-founder Joey Zwilliinger told the Wall Street Journal that Allbirds, profitable since its first day, is exploring an IPO “for a variety of reasons.”
American Golf, a specialty golf retailer in the U.K. with 132 locations and an estimated $183 million in annual revenues has been acquired by Endless. The British-based, mid-market private equity firm will acquire 112 of the retailer’s 132 doors and its two ecommerce websites, beating out Sports Direct and JD Sports Fashion with its unspecified bid. American Golf was founded in 1970.
Asics Tiger is reportedly adding robots to a Japanese factory that produces Onitsuka Tiger shoes in early 2019. The robotics, according to the Nikkei Asian Review, will stitch uppers and assume one-third of production at the plant in Tottori Prefecture, eliminating about half of the current factory staff. After perfecting automation in its home market, Asics hopes to introduce robot-driven production in both the U.S. and Europe.