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Kellwood’s Makeover: From Vendor to Brand Manager
With its second-largest shareholder threatening
a hostile takeover, Kellwood Co. aims to recast itself as a brand manager — not a long-troubled moderate vendor.
Following several quarters of declines, this fall Kellwood said it was restructuring its women's sportswear division. Then, a month later, it presented a plan outlining strategies for the next five years, including selling its dress shirt manufacturing division Smart Shirts.
To stave off shareholder and Wall Street pressure, Robert C. Skinner, chairman, president and chief executive of Kellwood, promised that by 2012 the company will:
• Be equally balanced between its traditional mainstream brands and better- and above-priced labels (from 30 percent today).
• Have owned brands contributing to 70 percent of sales (from half today).
• Drop private brands to only 10 percent of business (from 28 percent).
• Get 15 to 20 percent of revenues from direct-to-consumer retail sales (from 8 percent today).
All this happened as the bid for Kellwood's ownership turned from friendly to heated. Sun Capital Securities Group LLC twice issued the same $543 million bid to buy the $1.55 billion vendor — and the St. Louis-based Kellwood twice flatly rejected the $21 a share offer. "Kellwood's earnings guidance is extremely aggressive by any objective measure," Sun Capital said. "This projected growth significantly exceeds each of the company's peers and is far greater than anything Kellwood has ever achieved in the past. This disconnect is of great concern given Kellwood's established track record of performing below expectations....Having endured the worst stock price performance in the peer group over the past five years, shareholders are entitled to tangible evidence that Kellwood's performance is validating these aggressive projections."