financial
financial

Pressure Cooker

Tough times apparently call for drastic measures. Faced with more than a year of disappointing earnings reports, three of the biggest U.S. public apparel conglomerates are redefining the role of the wholesaler.

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WWD Year In Fashion issue 2007/12/11
Kellwood hopes to get huge revenue gains by expanding the four brands it acquired since September 2006 — Hollywould, Vince, Hanna Andersson and Royal Robbins — partially through retail expansion with a few additional Hollywould stores, tester Vince doors and 60 new stores for Hanna Andersson to total 78 stores by 2012. This should help bolster organic sales growth to 4 to 5 percent annually between now and 2012, according to the company. Kellwood also predicts the greater percentage of sales in brands at better or higher prices will generate higher margins, as well as a 30 percent increase in marketing spending. Skinner added he hopes to hold the decline in sales of the legacy brands at $15 million.

Along with growth, the hope is the $225 million restructuring plan will yield cost savings and increase operating margins for existing businesses to 9 percent. Besides implementing corporate and supply chain cost reductions totaling about $90 million by 2012, Kellwood streamlined its women's sportswear business in September, when it was faced with a $66.3 million second-quarter loss. It went from seven to three sportswear divisions: Lifestyle Alliance for moderate brands, including Sag Harbor, Koret and Briggs New York; Designer Alliance for most of Kellwood's better-and-above price point brands, including Calvin Klein women's better sportswear, ck Calvin Klein women's bridge sportswear, O Oscar, David Meister and Hollywould, and Modern Alliance for junior and contemporary lines, including XOXO, My Michelle and Vince.

Many veteran Kellwood executives also exited, including Steven L. Ruzow, president of Kellwood's Calvin Klein division and formerly the president of Kellwood Womenswear, and Paul A. Robb, ceo of Kellwood's Lifestyle Design Group, which included O Oscar and Sag Harbor.

Phat Fashions, acquired in 2004, also had its share of changes. Russell Simmons left, and Kimora Lee — who launched the higher-end KLS Collection line — was promoted. Phat Farms men's division became solely a licensing model, and Phat Fashions will be reported in the company's women's sportswear segment.

A New Regime at Liz

It's been quite a year for Liz Claiborne Inc.

Under William L. McComb, a former group president at Johnson & Johnson who replaced Paul Charron as chief executive officer in November 2006, the $4.99 billion firm split between "partnered" and "direct" brands, put 16 of its brands up for sale and shook up management.
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