Tag - Kwd

Kellwood Company (NYSE: KWD), a marketer of apparel and consumer soft goods, rejected a takeover bid from Sun Capital Securities Group.

Sun Capital originally made a bid to acquire Kellwood at $21 per share, or $543.9 in aggregate.  The small cap said it concluded that “after careful consideration … and taking into account the potential benefits that may be realized through the company's previously announced long-term strategic plan” selling the company was not in the best interest of the shareholders.

Shares of Kellwood (KWD) were halted ahead of the opening.

Women’s and men’s sportswear marketer Kellwood Co. (NYSE: KWD) was upgraded today by Lazard Capital to a rating of “buy” from “hold,” based on an unsolicited bid by Sun Capital for Kellwood as well as on a number of strategic initiatives the retailer has undertaken.

“Our argument isn’t that it can’t go lower (it can). Rather, we think it is likely that margins will recover even if the moderate segment remains challenged” Lazard analyst Todd Slater wrote in a research note today.

The company has undertaken a number of initiatives that Slater thinks will boost margins.

Among the small-cap retailer’s initiatives, Kellwood will begin licensing its men’s Phat Farm business in spring of 2008—a move that according to Slater, should cut costs, boost margins and lower risk for the company. Slater says by refocusing Phat Fashions as a pure licensing model, “Kellwood is quietly evolving this business into a shareholder’s dream: capital light, margin right.”

Kellwood also recently ended an unprofitable pants joint venture to address manufacturing inefficiencies in its Smart Shirts operation in the second quarter of 2007.

Shares of Kellwood Company (NYSE: KWD) shot up this morning after the marketer of apparel and consumer soft goods disclosed this morning that Sun Capital Securities Group, LLC has made a bid to acquire the company at a price of $21 in cash per share.

Kellwood said it would consider the bid along with other options in relation to the company’s previously announced long-term strategic plan.

Shares of Kellwood (KWD) shot up 29%, or $4.41, to $19.58 out of the gate.

To read a recent profile on Kellwood, click here.

Shares of Kellwood Company (NYSE: KWD) took a beating today after Broadpoint Capital downgraded the marketer of women's and men's sportswear to a “neutral” rating from “buy,” based on corporate restructuring efforts, financial weakness in a private-label and Moody’s review of Kellwood’s debt.

Kellwood said that its corporate restructuring could take 12 to 18 months and now expects additional restructuring charges of $30 to $36 million in the second half of 2007 and fiscal year 2008. This comes after the company spent $114.3 million on restructuring charges in the second quarter.

The St Louis, Mo.-based company is also having difficulties with its private menswear label Smart Shirts. According to Broadpoint Capital analyst Randall Scherago, the recent decline in profitability in the fashion line could weigh down earnings.

“We believe there continues to be financial pressure on Kellwood's mid-market consumer, as there are no "must-have" fashion trends to drive mall traffic,” Scherago wrote in a research note today. 

Adding to difficulties facing the company, on Friday, Moody’s put Kellwood’s debt under review for a possible downgrade on concerns about the sustainability of Kellwood’s “operating margins and weak financial metrics.” According to Scherago, such a downgrade could “impair the company’s acquisition strategy,” as management continues to focus on acquisitions. Further, according to Scherago, the company is not fully integrating its acquisitions to fully capitalize on synergies.

Additionally, Scherago points out that many of the brands in each division have different target customers, retail partners and price points.

Kellwood recently downgraded its fiscal 2007 revenue and earnings guidance. The firm now expects revenues of between $1.95 billion and $2 billion down from previously forecasted levels of between $2 billion and $2.03 billion. Kellwood cut its EPS estimate to $1.30 to $1.40 from a range of $1.80 to $1.89.

Scherago is forecasting earnings of $1.30 per share on revenues of $1.93 billion, while five analysts polled by Thomson Financial on average anticipate earnings of $1.42 per share on revenues of $1.99 billion.

Shares of Kellwood (KWD) slid $0.79, or 4.95%, to close at $15.17 on Tuesday.

Shares of apparel maker Kellwood Co. (NYSE: KWD) have been in tatters in recent months. More than anything, the St. Louis company behind such diverse labels as Sag Harbor, Gerber, Liz Claiborne and Phat Farm has suffered more from industry conditions than from execution of its business strategies.
 
Outside of the retail sector, few consumers would recognize Kellwood as the apparel powerhouse behind a laundry list of brands that it either owns or controls through licensing agreements. It has grown over its 46-year existence to become a company with $2 billion in annual sales, yet it remains a small-cap stock to own, with a market capitalization of about $505 million after Wednesday’s dip to a new 52-week low. 
 
Retailing is in the throes of big changes, and Kellwood is tangled up in them. Wal-Mart Stores Inc. (NYSE: WMT) has been trying to shore up its bottom line. Macy’s Inc. (NYSE: M) has struggled to absorb another St. Louis company, the former May Department Stores, which has resulted in store reductions – and fewer places to sell the Kellwood brands. During the fiscal year ended February 3, Wal-Mart accounted for 12% and Kohl's Corp. (NYSE: KSS) accounted for 11% of Kellwood’s net sales.

The retail turmoil has triggered a restructuring at Kellwood, including a facilities retrenchment and an executive shuffle. Controller and VP of finance Gregory Kleffner has taken over as chief financial officer, a title relinquished by W. Lee Capps III so that he can focus more on operations as chief operating officer.