Dunlap’s Hollywould brand, purchased by St. Louis-based Kellwood in December 2006, is now on the block, and as a result, the label’s operations are on hold until a deal is reached. According to a statement from Kellwood, the firm and Dunlap, who holds the title of creative director, “have mutually agreed to explore a range of strategic alternatives for the business.”
Specific reasons behind the decision to sell Hollywould remain unclear, but the $1 billion Kellwood has seen a shakeup in the past year. In February, Sun Capital launched a hostile takeover of the firm and appointed a new CEO, Michael Kramer, in July.
Kramer appears to be more focused on building Kellwood’s larger apparel brands, such as Baby Phat, Sag Harbour and Vince, than working to grow a small footwear brand.
“It was a matter of our size. [Kellwood is] such a huge company. They acquired Hollywould and realized how small we were,” Dunlap told Footwear News in an interview. “My hope is that someone will buy us that will really put the time, money and energy into growing [Hollywould and] focus on growing it big. We’re a small fish in a big pond right now.”
At the time Hollywould was acquired by Kellwood, analysts pegged the undisclosed purchase price at between $5 million and $10 million; both Dunlap and Kellwood would not reveal the brand’s current revenue figures.
It’s likely that the economic malaise led to Kellwood’s decision to divest Hollywould, said retail consultant Emmanuel Weintraub, whose firm bears his name.
“In this current environment, you have to have a core set of companies that you can afford to put money on. Kellwood had a lot of companies and they are — for reasons best known to themselves — getting rid of the ones that aren’t going to add value or have a good future for them,” Weintraub said. “It’s hard for big businesses to manage small businesses. … It’s a drain on management’s time.”
Regarding potential buyers, Dunlap said she could not afford to buy back the brand she founded in 2000, but about 10 firms have shown interest in Hollywould since Sun Capital acquired Kellwood. “I would love to have someone who knows the shoe business and can really build this into an international shoe business,” she said. “Shoes are still 70 to 80 percent of our business. They’re still what we’re known for and the area that has the strongest growth potential.”
Specifically, there are two potential buyers that Dunlap said she would be excited to see as owners. One is a branded lifestyle company with shoes, bags and clothing, and the other is a shoe brand.
Meanwhile, Dunlap explained that because of plans to sell the label, Hollywould is not shipping spring product and has halted prior plans for retail expansion. In part, she said, that’s so “going forward, this [new owner] will have a fresh start with Hollywould.”
The brand currently operates one retail store in New York’s Nolita neighborhood, but, as previously reported, had been eyeing locations in Los Angeles, Dallas and Miami, among others, for late 2009.
Kellwood and Sun Capital executives were not available for additional comment. In the statement, Kellwood said, “During Hollywould’s two-year relationship with Kellwood, Ms. Dunlap successfully worked to develop her vision of Hollywould as a contemporary luxury brand providing feminine and fun footwear, apparel and accessories with all-American appeal.”
Kramer added in the statement, “We are deeply appreciative of the creative passion and vision that Holly Dunlap brought to Hollywould and to Kellwood and wish her every future success.”
For her part, Dunlap is optimistic Hollywould will continue to thrive. “I’m excited about the future of the brand. This is going to be the best for the brand,” she said. “This is a good decision for everyone involved. It’s been great working with Kellwood.”