Port Washington-based Allen Edmonds Corp. has been acquired by Clayton, Missouri-based Famous Footwear parent company Caleres Inc. for $255 million in cash and revolving credit.
[caption id="attachment_157536" align="alignright" width="280"] Paul Grangaard[/caption]
Allen Edmonds was previously owned by Los Angeles-based private equity firm Brentwood Associates, which purchased the men’s footwear manufacturer in 2011for an undisclosed price. The sale was completed at about 2 p.m. and employees were informed at about 3:30 p.m., said Paul Graangard, president and chief executive officer of Allen Edmonds.
Allen Edmonds has 750 employees in the U.S. and about 300 employees in the Dominican Republic. All of them will be retained in the transaction, Grangaard said.
Caleres is the strategic buyer Grangaard has been looking for since he took on the leadership role eight years ago, he said.
“It’s very much a win-win for the community and for the company,” he said. “I’ve been here for eight years and this is what I have been looking forward to having happen since I came here: We would build this company to where it’s attractive for a major industry player that would keep it the same way that it is, and that’s what happened today.
“It’s also a strategic buyer that is not encumbered with other significant brand penetration in the men’s business. We’re going to be their major men’s brand and we don’t have to worry about conflict with any other men’s brands.”
He said Allen Edmonds will not be “folded in” to Caleres so much as it will operate fairly independently as an “appendage.” The company will maintain its operations and branding.
“This transaction took several months to incubate and we had a lot of good opportunities to get to know our counterparts and the CEO and the CFO and they’re just our kind of people, so we’re very excited about that,” Grangaard said.
Allen Edmonds’ manufacturing operations are different from Caleres’ because the Port Washington company focuses on men’s shoe manufacturing, which is quite different from Caleres’ focus—women’s shoes. For that reason, Grangaard does not expect manufacturing operations to change in the integration.
“They don’t have overlap with us, so it’s really all about going forward and growing together. Obviously we’re going to work closely together, but they want the team to stay in place,” he said. “In fact, that was one of the most important factors to them.”
Caleres’ annual revenue exceeds $2 billion. Among its brands are Sam Edelman, Franco Sarto, Vince, Via Spiga, George Brown Bilt, Diane von Furstenberg, Fergie Footwear, Carlos Santana, Naturalizer, Dr. Scholl’s, LifeStride, Bzees and Rykä. It has about 11,000 employees and operates more than 1,200 retail stores. Its shoes also are sold at department and specialty stores and at third-party retail websites.
Caleres CEO, president and chairman Diane Sullivan confirmed all of Allen Edmonds' employees will be retained in the transaction and its operations will remain in place.
"Yes, we love the team and that is one of the reasons they were so attractive to us," Sullivan said. "They have strong capabilities and have done a great job growing the business over the last several years.
"We currently don’t have any plans to relocate them. Over the next several months we will work together to identify ways to benefit from each other, including brand and product development, materials sourcing and design capabilities, to name a few. We have a lot to learn from each other and that is exciting."
Sullivan said the acquisition made sense for several reasons.
"First and foremost, they have a strong brand equity," she said. "Seventy percent of their customers recommend the brand. That is incredibly high. They are a growing brand with scale. They will be the perfect cornerstone for our men’s business. They appreciate speed to market, which becomes more and more important to the customer every day. They are also a great cultural fit, which was very important to us. And finally, they are financially accretive."
Allen Edmonds was founded in Belgium, Wis., in 1922 by Elbert W. Allen as Allen-Spiegel Shoe Company. Allen eventually partnered with Bill “Pops” Edmonds to form Allen Edmonds Shoe Corp. Grangaard has made bold moves—including launching a foreign licensing venture in 2012—to reinvent the historic company and fuel its growth.
Caleres sourced 35.8 million shoes, or about 76 percent of the footwear it sourced, from China last year, according to its most recent 10-K filing with the SEC.
“The addition of Allen Edmonds to the Caleres brand portfolio allows us to rapidly increase our exposure in men’s footwear, solidifying a new revenue stream to drive overall growth,” Sullivan said. “Allen Edmonds is a strong brand operating with a proven business model and we feel it is well-positioned for growth. Not only does Allen Edmonds have brand equity and a loyal customer base, its appeal extends beyond this base to yet untapped consumers. We think we’ve acquired one of the great gems in men’s footwear.
“We understand how special the Allen Edmonds brand is to its current consumers, and we plan to take it forward in a careful and disciplined way. We welcome their extensive knowledge and expertise in the men’s category and are confident this addition to our brand portfolio will further establish Caleres as a major player in men’s footwear.
“We see tremendous opportunity around Allen Edmonds’ direct-to-consumer business, which represents 75 percent of current sales. We’re also eager to explore their manufacturing resources, as we continue to focus on our ability to increase our speed to market.”