6/20/07

Kellwood acquires Hanna Andersson

In a move to expand brands and increase consumer-direct sales, Kellwood has agreed to acquire Hanna Andersson Corp. for about $175 million. The sale is expected to close by the end of Kellwood’s second fiscal quarter.

Mark Brohan , Research Director

Kellwood Co. is expanding brands and increasing consumer-direct sales with its agreement to acquire Hanna Andersson Corp. for about $175 million. Multi-channel children’s apparel retailer Hanna Andersson, No. 167 in the Internet Retailer Top 500 Guide, had web sales of $55 million for 2006. Overall 2006 sales, via catalog, 18 stores and HannaAndersson.com, were about $100 million.

The purchase could signal more such activity to come for Kellwood, says Mary Brett Whitfield, senior vice president at Retail Forward Inc., a research and consulting firm specializing in retailing and consumer products marketing.

“Hanna Andersson is a retailer, albeit vertically integrated with its own manufacturing,” Whitfield says. “But it’s the first acquisition for Kellwood of a multi-channel retailer. Their history is manufacturing. This could be the first of a number of acquisitions to sell directly to consumers,” Whitfield tells Internet Retailer.

The acquisition is a sign of the times particularly in the apparel field, Whitfield says. Companies such as Kellwood manufacture branded and private label clothing, but big retail chains are increasingly pushing their own brands. “Some suppliers are going to have to look at their own customer base for growth,” Whitfield adds.

Kellwood is a consumer brand manufacturer whose brands include Phat Fashions LLC, No. 307 in the Internet Retailer Top 500 Guide, a lifestyle clothing brand headed up by hip-hop mogul Russell Simmons. Kellwood had sales of about $2 billion in 2006, the company says.

Kellwood chairman, president and CEO Robert C. Skinner Jr. says the acquisition complements Kellwood’s business and brand portfolio corporate strategy. “As we have stated, one of our goals is to expand into upscale brands and Hanna Andersson positions Kellwood in the better category of children’s apparel. Another part of our strategy is to connect more directly with the consumer. The Hanna Andersson business model is focused on a direct-to-consumer format with a rich media e-commerce site, colorful catalogs and an inviting store format. In addition, Hanna Andersson complements and strengthens our successful and strong children’s business platform that we have established with Gerber Childrenswear.”

Philip Iosca, president and CEO, will continue as head of Hanna Andersson management.

The sale is expected to close by the end of Kellwood’s second fiscal quarter.

Topics:

business finance, marketing, Private label

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