The deal takes the Madden company into a whole new market segment, that of high-end designer footwear.
Brian Atwood has a new partner: Steven Madden Ltd.
Atwood and Steven Madden Ltd. have acquired the Brian Atwood intellectual property and related assets in a series of transactions involving Bluestar Alliance LLC and The Jones Group Inc. for an undisclosed amount.
As reported, Bluestar was initially interested in acquiring the Atwood brand, and in the course of those negotiations facilitated the introduction of the designer to Madden.
The negotiations involving the Brian Atwood brand were triggered when the footwear designer exercised his buyback option after it became common knowledge that Jones was considering a sale of the company. At that point, Sycamore Partners, which later acquired Jones for $1.2 billion, wasn’t yet in the picture.
The IP assets acquired by Atwood and Madden cover both the Brian Atwood and B Brian Atwood brands under a new entity that will operate as a separate division of Steven Madden, with Atwood holding a minority stake, according to Edward R. Rosenfeld, chairman and chief executive officer of Steven Madden.
The deal takes the Madden company into a whole new market segment, that of high-end designer footwear competing against the likes of Jimmy Choo, Nicholas Kirkwood, Charlotte Olympia, Christian Louboutin and Manolo Blahnik.
While Atwood will set the creative direction, Madden’s design team will follow through with the execution of those plans. Support departments will assist in day-to-day operations, such as customer service, sourcing, production and marketing. The transition from Jones will begin with spring 2015 deliveries.
Rosenfeld said that the combined Atwood businesses will hit “breakeven in its first year,” but is expected to be “accretive” in the years that follow.
The Atwood businesses are still relatively small, and are considered emerging brands. The designer collection was started in 2001, while the B Brian Atwood contemporary brand launched two years ago. The designer collection is sold at Bergdorf Goodman, Saks Fifth Avenue, Net-a-porter and other high-end boutiques. The contemporary footwear line is sold in better department stores and specialty retailers such as Bloomingdale’s and Shopbop. The handbag offerings for the contemporary brand, which first showed in fall 2013, are sold in the better department store channel.
Overall volume for both of Atwood’s businesses is about $20 million, said Steve Madden, the creative consultant for his namesake firm, who added, “I plan on tripling it in the first year.”
Madden couldn’t contain his enthusiasm for his firms’s newest brand baby. His company, in addition to its collection of Madden labels, also owns the IP for the Betsey Johnson brand.
“I love adventure. We’re now in the Atwood era,” he said.
Madden said he was attracted to the brand for two reasons: “Brian Atwood is a premier designer and he’s also American, which I love, although everybody gets upset when I say that. When you go to the floors at Barneys, there aren’t many American designers. Brian is a Midwest boy and he’s brilliant. We like that.”
Madden also likes the fact that Atwood is in the high-end luxury arena, an area where Steve Madden Ltd. is not. “We’re already in contemporary. Now we’re in superluxury as well. We’re excited to be in both businesses,” Madden said.
While there’s already interest for the luxury collection from Asia, the Middle East and the Far East, Madden said the “priority near term” is to grow both businesses in America.
Don’t expect Atwood’s contemporary line in Steve Madden stores, though. “We don’t want to confuse the customer. We will open stores eventually as the market dictates and the desire for it increases. First we’re going to try to identify and target open-to-buys in department stores. I’m going to work with Brian on making the right shoes and helping wherever we can,” Madden said.
The company will also take lessons from its Steven Madden Web site and create a comparable digital footprint for Brian Atwood, Madden said.
For Atwood, the new structure is expected to allow him greater ability to expand both collections.
“I always had a buyback option in my contract,” said the designer, who disclosed that the series of transactions took about eight months of negotiations. “The main thing is that I have operational and creative control of my business in Milan. For B Brian Atwood, Steve and I will follow the guidelines outlined in our IP entity.”
The Madison Avenue store for the Brian Atwood designer collection was closed recently, since that location remained part of Jones’ real estate portfolio, and Atwood is currently eyeing possible sites for a new flagship.
The designer is also considering expansion opportunities for the luxury line. “The collection is just women’s shoes, but handbags are possible. So is a men’s capsule collection. The men’s market has changed a lot. Men are more interested in fashion,” he said.
Atwood also isn’t ruling out the addition of apparel for the collection and evolving it into a lifestyle brand, noting that his training is in women’s sportswear. “I trained with Gianni Versace and first started in apparel, but switched to shoes when I moved to Milan,” he said.
While those plans are certainly further down the road, Atwood clearly has no shortage of ideas for expansion for Brian Atwood: “There are so many products and things we can do with this brand.”
Neither Madden nor Atwood has ruled out the possibility of bringing in new investors to help fuel the global expansion of both brands, with Atwood saying that the “door is open to those conversations” and Madden noting that they’ll be “opportunistic” regarding their options.
The two already have been in meetings to build the Atwood team and just hired a global brand ambassador for both brands. The identity of that individual is expected to be made public over the next few weeks.
As for Sycamore and Jones, the current plan for when the transaction closes is for the Jones businesses to be carved out into four independent entities: Stuart Weitzman, Kurt Geiger, Jones Apparel and the balance of the company — the legacy footwear and denim businesses — to be renamed Nine West Holdings Inc. Sources believe that Nine West, which will be saddled with a heavy debt load going forward, is the operation that Sycamore plans to keep. The other entities, based on the new independent structures, also make it easier for each one to be sold off one by one, these sources said. Geiger and Weitzman are seen as Jones’ most promising units.