At Kellwood's annual meeting June 2, Skinner told shareholders that the intimate apparel group's performance had been disappointing during the past year. For the year ended Jan. 29, sales in the intimate apparel group dropped 5.3 percent, or $23.5 million.
"I think we stayed with a business model that had worked very well for us in the past and perhaps stayed too long — that of being essentially a manufacturer of commodity products," Skinner said at the meeting. "Intimate apparel, as we've said publicly, has been a challenged part of our business. The key right now is fixing it."
At the time, neither Skinner nor Hal Upbin, Kellwood's former ceo, who will remain as chairman through January, denied that selling the division was a possibility. "We are getting into new strategic planning, so all avenues are open right now in that process," Upbin said.
One former Kellwood executive, who asked not to be identified, said on Wednesday, "Moderate brands and the moderate market are going through a tough time right time — and so is Kellwood. When the company took a hit of more than 50 percent in the first quarter, they said it was the fault of intimate apparel. That's like GM saying their business is off because the Saturn isn't selling."
Kellwood announced the restructuring shortly after 5 p.m., although speculation about the business circulated throughout the day. Shares of Kellwood, which is traded on the New York Stock Exchange, closed Wednesday at $28.11, up 0.57 percent.
Kellwood recently came off a disappointing first quarter. Earnings for the quarter ended April 30 declined 50 percent to $12.5 million, or 45 cents a diluted share, from $25 million, or 90 cents, versus a year ago. The drop for the quarter was attributed in part to lackluster sales of women's sportswear.
Sales for the quarter fell 6.8 percent to $639.4 million from $686.1 million in the prior year. Sales of women's sportswear declined 17.8 percent to $360 million from $438 million, with the decline primarily in the firm's popular-to-moderate and private label businesses. The dress category contributed $26 million to the decline (Kellwood includes dresses in its sportswear division). One upbeat note was sales of men's sportswear, which increased 28.3 percent to $164.5 million from $128.2 million.