financial
financial

Kellwood to Exit 3 Divisions in Overhaul, Cuts Earnings Outlook

Kellwood Co. said it was closing several units, including intimate apparel, representing $335 million in sales, and lowered guidance for the year.

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NEW YORK — Kellwood Co., seeking to restore itself as a top branded apparel company, announced a major restructuring Wednesday that could result in the sale of three of its 14 divisions.

In the first major moves since Robert C. Skinner Jr. was promoted to president and chief executive officer two months ago, the company also said it would reduce its second-quarter and fiscal 2005 outlook.

Kellwood said it has put in place a strategy to exit the Kellwood Intimate Apparel Group, Kellwood New England and Kellwood Private Label men's wear divisions — excluding its Smart Shirts subsidiary. In addition, the company is restructuring its Oakland Operation by pulling out of several labels to better focus on developing the Koret brand.

The future of the divisions was unclear. Kellwood said it was working out alternatives for each of the businesses and is considering the sale of some or all the units. It has retained investment banking firm Financo Inc. and its chairman, Gilbert Harrison, in an advisory role.

Skinner said in a statement that the strategy to exit nonstrategic businesses is part of an initiative to reestablish Kellwood as "a premier marketer of branded apparel and related soft goods.

"We expect that these actions will allow us to better focus our resources to further build our existing portfolio of lifestyle brands and effectively pursue additional growth opportunities in the marketplace," Skinner added.

"This strategy, along with actions taken to upgrade our talent base, reduce cycle times and improve our assortments, should result in better operating performance in fiscal 2006," Skinner said.

Several of the $2.6 billion company's labels have seen dwindling sales as department stores merge and cut back on their moderate areas.

Kellwood New England includes the David Brooks, Northern Isles (women's), Pink Poodle and licensed Bill Burns brands. Bill Burns went through a makeover for fall with a stronger focus on contemporary separates rather than coordinated suits and ensembles, and planned to build its distribution to specialty stores nationwide. Industry sources peg Bill Burns' wholesale volume at $10 million to $12 million.

Some of these sportswear lines are small in comparison with the businesses Kellwood intends to keep, such as Sag Harbor, which generates $600 million in wholesale volume (including licensees), and Phat Fashions, which garners $750 million in retail sales through its Phat Farm and Baby Phat labels.
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