Women’s Wear Daily
04.23.2014
fashion-features
fashion-features

Kellwood Clicks Along: Profits Surge 70.3% As Deals Accumulate

Despite a 70.3 percent leap in Kellwood’s second-quarter profits, poor fall and holiday orders helped dampen expectations for the year.

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“The orders are softer because the current inventory glut from spring has flopped over for fall,” Hal Upbin, chairman and chief executive officer, said in a phone interview. “We’re not a reorder house and that’s why we took the sales down a little.”

Upbin, though, sees hope in the recent performance of retailers and the positive signs from the back-to-school season.

While the future may be looking up some, times have been tough for a while throughout the industry. To adjust, Kellwood managed its inventory closely, pulling down the goods it has on hand, excluding acquisitions, at the end of the quarter by $57 million, or 14 percent against a year ago.

Kellwood’s new licensing deals for Calvin Klein women’s sportswear from Phillips-Van Heusen and Def Jam University urbanwear from Phat Fashions will produce little volume in the second half, but require start-up spending equal to roughly 7 cents a share.

However, these are only two of the new projects in which the firm has embarked recently. Kellwood also has taken on licenses for Liz Claiborne dresses and suits, an Izod moderate women’s line from PVH, XOXO junior apparel from Global Brand Holdings, Run Athletics and Dockers’ tops with Levi Strauss & Co.

In all, Kellwood is spending about $8.5 million before taxes, or 20 cents a diluted share, on new initiatives this year. The new lines of business are helping support the firm’s organic sales growth, which is expected to charge ahead 7 to 9 percent in 2004.

“With so many great programs, I don’t know how we could miss,” said Upbin, pointing to the firm’s many new licensing arrangements. “Even if nothing else grows, we should have that kind of growth.”

While known for proficiently juggling many different businesses at once, even Kellwood may have to take it easy for a while.

“We’re not heroes,” said Upbin. “We know when we should back off some. We’ve added a lot of initiatives.”

Most of the firm’s new projects have been opportunistic, he noted, adding, “You just can’t control the flow. They come when they come and we grab them.”
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