Blog: Kellwood more agile after reorganisation
Leonie Barrie | 7 September 2007
As Kellwood Inc plunged into the red yesterday, investors and industry observers can take some consolation from the fact the apparel maker is trying to untangle itself from the changing face of retail, which is at the root cause of its problems.
The company, which is behind such diverse labels as Sag Harbor, Gerber Childrenswear, XOXO and Phat Farm, swung to a second quarter loss of $65.8m as sales were stifled by poor demand for some of its private label women’s wear brands.
It now plans to trim down its women's sportswear business from seven to three operating divisions – ‘Lifestyle Alliance,’ ‘Designer Alliance’ and ‘Modern Alliance’ – focusing on its moderate brands, better and above price point brands, and the juniors business respectively.
The shake-up is intended to create a more agile organisation that can adapt to changes in its brand or customer portfolio, improve speed to market, and reduce costs through efficiencies in scale.
Kellwood has in the past attempted to maximise growth by acquiring as many brands as possible to guard against fashion cycles or over exposing itself to any one brand or channel. But department store consolidation has hit hard, leaving fewer takers for its brands and order cut backs on its poorer performing apparel lines.
Steps already taken to meet new demand from department stores for private label, or exclusive, brands include the launch of O Oscar, an Oscar de la Renta company, exclusively at Macy's.
And in recent months Kellwood has acquired the Vince, Hollywould and Hanna Andersson brands to shore up its higher profile, higher-priced apparel offer.
Like its rivals VF Corp and Liz Claiborne, Kellwood is now trying to reinvigorate its core business by pegging its hopes on what it sees as hot brands with big growth potential. But it is likely to feel continued pressure to perform, at least for the foreseeable future.
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