Nearly a year ago, Camuto Group agreed to be bought by privately held Canadian giant Aldo. Less than three months later, the blockbuster deal, which captured industry attention and aimed to bring together two of the most storied names in shoes, was killed.
While the merger was scrapped after “careful consideration and thoughtful discussion” by both firms, executives inside Greenwich, Conn.-based Camuto were disappointed.
“You always regret if any transaction doesn’t come through in the end,” said CEO Alex Del Cielo.
In the weeks following, the firm, whose founder and creative visionary, Vince Camuto, died in 2015, needed a new way to move its business forward.
Indeed, it has. In recent months, the company has hired turnaround adviser Clear Thinking Group, made an aggressive entry into the kids’ market, launched a costume jewelry business and acquired Sole Society, a multibranded site that will enhance Camuto’s offerings.
For their part, retailers like what they see.
“We have always valued our partnership with the team at Camuto Group,” said Kristin Frossmo, EVP and GMM of Nordstrom’s shoe division. “They are engaged and collaborative with our merchandising team.”
In their first major interview in nearly a year, Del Cielo and president Ed Ferrell weigh in on new business initiatives, market rumors (and where they may have originated) and why the duo would go through the sales process all over again.
Let’s talk about life after Aldo. How much did that impact the company?
Alex Del Cielo: “We’re continuing to work on the businesses we launched in 2017. The Aldo deal was never a deal that was going to drastically change what we did at Camuto Group. For the most part, it was easy to continue to move along. With or without Aldo, Camuto was going to remain a wholesale, sourcing and design footwear and accessories company. That wasn’t going to change.”
What did you learn throughout the whole deal, no-deal process?
ADC: “The hardest part was the time that it took. Let’s face it — we are all very busy at work. That’s every company in every industry. And when you’re doing a deal, you have something else taking time away from that. That’s always a challenge.”
Ed Ferrell: “At the same time, you always have to keep your eye on the prize. That’s in terms of product, our retail partners as well as the consumer. No matter what process you’re going through, from buying a building to being acquired, you have to stay focused on what the main purpose of your business is and driving it in the right direction. That’s not always easy because you do get distracted with questions. But we learned a lot through that and how to manage change very well.”
ADC: “We also learned how to communicate that change. The group that was dealing with Aldo directly inside of Camuto was a small group, but I think we did a better job as we went along communicating with the company at large with what was going on, telling people, ‘Here’s where we are at.’”
Shortly after the deal unraveled, Camuto Group hired Clear Thinking Group. What was it trying to fix?
ADC: “They helped us when we had a problem in our distribution center, which caused a bit of a cash problem for us. They helped us work through that. They continue to give us advice on management reporting and give us structure in looking at things. They’ve brought in tools we didn’t have in the past. Camuto Group was never a formal organization, and [Clear Thinking] has brought some discipline in that respect. They’ve helped us analyze the business a little bit differently.”
EF: “When you’re so close to something, sometimes getting somebody from the outside to take a look and give you a fresh point of view — to even validate what you’re doing — is important. They can also help suggest some changes.”
You mentioned cash flow issues. To set the record straight, how serious was it?
ADC: “We had a financial structure that we outgrew. It caused a cash flow problem. We needed to address that.”
Is it all resolved?
ADC: “We’re getting there.”
Moving forward, what new initiatives should the industry expect to see from you?
EF: “The Vince Camuto brand is paramount to the company — it is our hallmark brand. So we launched other businesses related to that in other categories. For instance, we launched Vince Camuto kids’ footwear; spring ’18 was our first season at retail.”
ADC: “We are known for the quality of our footwear and for our fit. We felt that Vince Camuto would translate very well into the kids’ market today.”
Why is kids’ so important right now?
ADC: “We did a bit of kids’ business for Dillard’s on one of their brands, and we felt that if we were doing it, why not do it for ourselves? Once we start something, we like doing things in a big way.”
EF: “We’ve actually started six kids’ brands in the last year: Vince Camuto boys and girls, Lucky boys and girls, ED Ellen DeGeneres girls and babies. We also have Sole Play, which is for toddlers. It’s a lot of little shoes at once.”
How ambitious do you want to be in that market?
EF: “It’s meeting the goals we set internally. Like with any business we have, we are going to try to exploit that and grow it very aggressively. We put the tools in place to do that.”
What other categories has Camuto entered?
EF: “In the fourth quarter of 2017, we moved into costume jewelry for the Vince Camuto brand. And in 2016, we also acquired Sole Society, a multiplatform footwear website that gave us enhanced category offerings. We just launched jewelry for Sole Society as well.”
What advantages did the Sole Society deal give you?
EF: “We were seeing where the business was going in terms of digital explosion. We bought it because we liked the brand and the categories it represented. But we also thought it was a place where we could launch a multibranded website that could showcase our own brands. On the Vince Camuto website, it’s all Vince Camuto. This gave us another platform. It has two segments to it. Obviously, the online [marketplace] is the retail piece, and we’re exceeding plans there. But there is also the wholesale component, where Nordstrom carries the Sole Society branded merchandise in their doors.”
Why is it important to be a stable of brands and services?
EF: “The customer is changing. If you look back, many brands that existed 10 years ago that were sitting in a lot of department store space, many of those don’t even exist anymore. We are trying to look at brands that are relevant to the end-use customer. Some of our newer offerings are also because we see white space in our retail partners. We have strong relationships with our retailers. When we go out with a new brand or retailers come to us with an idea to partner on, they know they’re going to get quality and fit, and they give us space on the floor to launch a brand. That gives us a big advantage in launching and growing brands. You have to develop new things, and you have to have things in the pipeline all the time.”
How else have you rounded out your business?
ADC: “We made a huge investment, about $40 million, in our distribution center in New Jersey. That was to handle how the business has changed, giving us a greater ability to go direct to consumer, whether it’s drop-ship for our wholesale customers or for our own website.”
To clean up operations, the company shuttered all its retail stores. Tell us more about that.
ADC: “We closed all the stores because we weren’t a very good retailer, and sometimes you can’t be all things to all people. When you’re not successful in a certain business, you close it down. Unfortunately, it’s expensive to get out of.”
Related to those closings, there are lots of rumors about Camuto Group in the market. What’s your take on them?
ADC: “The 2018 rumor is that we were bankrupt and we were going out of business. We haven’t gone bankrupt, and we haven’t gone out of business, which [is something] people have been saying since Vince died.”
EF: “I find it interesting when people do say that about us. It means we are something to look at. I try to turn it into a positive. They are talking about us because we’ve led the industry for a lot of years. It’s interesting when their words aren’t so kind.”
Do you think the competition planted the rumors with the hopes of taking market share?
ADC: “Absolutely. I think they try to do that, but what they underestimate is our relationship with the retailer, who — when they hear something like that — tend to call us. I think it’s funny that that is what others have to resort to.”
Are you worried about an escalating U.S.-China trade war?
ADC: “It hasn’t affected our business because we pay duties that have been pretty much the same for a long time. No brand or retailers will be able to absorb the tariffs. It’s going to get passed on to the consumer. When you look at any of these consumption taxes, it is the consumer who ultimately pays.”
EF: “I guess the good news, bad news is that it has a level setting to it. It’s not Camuto Group getting hit with a tariff, it’s the industry. Nobody is immune to it.”
Where do you stand on future deals? Would you look to go through that sales process again?
ADC: “Yes, if it was the right deal. Ultimately, my job is to get our shareholders value. If the opportunity presents itself, absolutely.”
Are you in talks with anyone now?
ADC: “Lots of people call us all the time.”
What kind of potential buyer appeals to you more: another shoe company or private equity?
ADC: “I think someone from the shoe industry is probably more appealing. Strategic people have a longer-term view of things. But again, ultimately, our job is to get value for the shareholders.”