Blog: Leonie BarrieWhat’s next for Kellwood?

Leonie Barrie | 13 February 2008

After five months of wrangling, Sun Capital has finally bought Kellwood. The private equity group today said its affiliate, Cardinal Integrated LLC, has acquired about 82% of Kellwood’s shares – giving it ownership of the struggling apparel maker. Kellwood will now be merged into Cardinal and become a wholly-owned subsidiary of the company.

The private equity firm, which first expressed interest in buying Kellwood last September, has so far said very little about its plans to rejeuvenate the business. All we know is that it is “prepared to commit substantial resources beyond the purchase price to build Kellwood's business,” and “develop its branded portfolio.”

Which isn’t a world away from the strategy that Kellwood was already pursuing.

The company’s management last year come up with a own turnaround plan based on reducing its exposure to private labels and repositioning the business so that 50% to 70% of its revenues would come from its higher-end lifestyle brands like Vince and Hollywould.

In January it sold its Smart Shirts shirt-making business to Youngor Group for $120m, and said it wanted its own retail operations to grow from 8% to 20% of sales. 

It even consolidated divisions, trimming its women's sportswear business from seven to three operating divisions in a bid to make the organisation more agile, improve speed to market, and cut costs.

Aside from more cost cutting and consolidation – both of which are easier to do as a private rather than a public company – it’s hard to see what more the new owners can do.

And with stonger, more powerful competitors like Liz Claiborne and Jones Apparel Group also struggling to find ways to shore up their own businesses, despite having a roster more powerful brands than Kellwood, the prospects for success must look challenging, to say the least. 

Kellwood agrees to $542m Sun Capital buyout


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