Wolverine Snaps Up Chaco

SALT LAKE CITY — When the going gets tough, go shopping.

That’s been Wolverine World Wide Inc.’s mantra of late. The Rockford, Mich.-based company made its second acquisition this month when it revealed its buy of Chaco, a performance outdoor brand, last Thursday. The label will become part of the company’s Outdoor Group.

“It’s a buyers’ market,” Scott Sible, president of Wolverine’s Outdoor Group, told Footwear News on the Outdoor Retailer show floor. “It’s the perfect time to buy if you’ve got cash.”

Sible, who called Chaco a “phenomenal outdoor brand,” said the deal came together very fast. The next step, he explained, is to evaluate how the brand meshes with its Merrell and Patagonia brands, which are also part of the outdoor segment. “We need to take the time to get to know the brand before we make any decisions,” Sible said. “We’re not doing this to compete with existing brands.”

Chaco founder Mark Paigen will stay on board as a consultant to the business. The brand’s employees will also remain. Paigen said he first started looking for funding in November and Wolverine was a top choice.

For their part, analysts were generally upbeat on the news.

“The brand is relatively small, though certainly bigger than the recently acquired Cushe,” said Jeff Mintz of Wedbush Morgan Securities. “There is a big opportunity for [Wolverine] to use its relationships to expand Chaco’s distribution, particularly overseas.”

Scott Krasik, an analyst with C.L. King & Associates, said the acquisition could be a smart growth vehicle for Wolverine. “To some extent, it’s necessary because there is less growth available to them in their existing portfolio,” Krasik said. “They haven’t done as good of a job as they would have liked at Sebago.”

Krasik added that Merrell is feeling the impact of the consumer spending slowdown, “so whether it’s store growth by opening new Merrell stores or acquisitions, [the company] needs an avenue to grow.”

The analyst said Chaco fits in well with Wolverine’s other brands, but added, “I’m not sure what the opportunity is in terms of how big it could be.”

International is the biggest opportuntiy, Krasik said, because 90 percent of Chaco’s business is done in the U.S. market.

Looking ahead, Sible said Wolverine continues to look for more acquisitions, and another deal could come soon.

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