Inside the Sam Edelman Deal

Inside the Sam Edelman Deal
Diane Sullivan with Sam and Libby Edelman

NEW YORK — Sam Edelman is firmly focused on the future.

Now that his 6-year-old namesake company, Edelman Shoe Inc., is 100 percent owned by Brown Shoe Co., the founder sees even more opportunity for expansion into new categories and global markets.

“This is a pivotal time, and there are businesses under the Edelman [umbrella] that require tremendous attention,” Edelman told Footwear News from his showroom on New York’s 57th Street. “There is a lot going on, and we want to cement a place for the core brands for the next 25, 50 or 100 years.”

Three years after first striking a partnership with Brown, Edelman and his wife and business partner, Libby Edelman, last week sold the remaining 50 percent stake to St. Louis-based Brown in a cash-and-stock deal valued at $39.6 million.

Sam and Libby Edelman will retain their respective roles as president and head of marketing, and Brown President and COO Diane Sullivan said no changes are expected in the day-to-day operations at the company, which will preserve its design staff, sales team and office and showroom space. Rather, she noted, Brown is relying on the Edelmans to stay at the center of it all.

“Today feels the same as two weeks ago,” Sullivan said. “It’s absolutely critical that the leadership in our company owns, drives and develops their brands. … Sam and Libby have a terrific track record with creating brands, and we have a lot of respect and belief in them.”

It is a tactic that other power players in the industry are hailing as a smart move. “[Sam is] the DNA of the brand,” said Titan Industries CEO Joe Ouaknine.

Bob Galvin, president of The Camuto Group, said the two companies are a good match. “Brown has great global resourcing and distribution. That can only help on the international stage.”

Brown initially purchased a 42.5 percent stake in Edelman and expanded its ownership to 50 percent in 2008. Since its inception, the Edelman business has grown to $60 million in sales.

Plans to build a pervasive lifestyle brand under the Sam Edelman name are still paramount, Edelman said, with potential categories including handbags, swimwear, sunglasses, fragrances and apparel. (Libby Edelman footwear was the first spinoff and the line now includes jewelry, apparel, legwear and handbags.) Under Brown, Edelman also will now have unfettered access to its parent company’s expansive sourcing and distribution networks.

Here, the Edelmans and Sullivan sound off on the timing of the deal and their plans moving forward.

FN: Why was now the right time to sell the remaining stake of Edelman Shoe?
SE:
We need more resources today. The company has grown so dramatically, with such a terrific foundation, [and we were] ready to blend even more into the structure that Brown offers. It was time to strengthen the organizational team, call upon more help from top management, solidify for our future growth [and form] even closer ties with our Brown factory base.
LE: Brown gives us the ability and the opportunities to grow both the [Sam Edelman and Libby Edelman] brands to their fullest. [We want them] to be around for a long time.

FN: Why was it so appealing for Brown?
DS:
It was always the intent that it would end this way. The Sam Edelman brand and the entire organization [is a] critical part of the future of our company. Sam and Libby create brands, [and] we always knew that we were betting on people with a terrific track record. We also saw, as our companies evolved, that this contemporary fashion space is really where consumers are going. We really see the Sam Edelman and Libby Edelman brands as a cornerstone of that [market].

FN: Will the day-to-day operations at the brand change?
DS:
Not at all, and that’s the beauty of it. … Sam and Libby have a great vision for what this business is and where they’re taking it. I see [Brown’s] job as figuring out how to support that [goal] and making sure they have the resources to do the job and achieve their vision.
SE: We’ve already been together for three years. We’ve coordinated the back-office functions, sourcing and our interaction with the Brown team. For the three years, Diane and I have talked about all the pivotal decisions because we wanted to, not because we had to.

FN: What are some of the biggest initiatives for growing the firm?
SE:
Both brands are growing dramatically in terms of table space within the better stores across the map, and the first initiative is to continue the lifestyle story [and] build our core businesses. [For example], Libby Edelman has several product extensions already — legwear, handbags, accessories, ready-to-wear and jewelry — and a partnership with HSN. [We are also] developing a complete Sam Edelman handbag collection for the August market. … We have so many licensing and brand expansion opportunities.
DS: [There are also] opportunities for website development, e-commerce and direct-to-consumer [stores].

FN: The company already laid out ambitious plans for growth, from international expansion to branded retail. Will this deal expedite any of those plans?
DS:
It’s really all about Sam and Libby finding the right people to work with. … We’re intent on building something strong, lasting and long beyond the three of us.

FN: Sam and Libby, you have built up your share of brands over the years. Would you consider launching any new businesses?
SE:
Right now, [Brown’s] intention is to help us manifest the vision we have for the Sam Edelman and Libby Edelman brands. If Brown can find a way to invent a nine-day week, we’ll talk about doing other things. [For the time being], we are intent on building [our current brands] and serving all our customers with integrity.

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