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Allen Edmonds Acquired by Famous Footwear's Parent Company

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  • #16
    from http://www.bizjournals.com/stlouis/n...5-million.html


    Caleres has acquired Allen Edmonds, a retailer of men's footwear, from Brentwood Associates for $255 million, the company announced Tuesday.

    The acquisition is being funded through existing cash and the company’s revolving credit agreement. A closing date has not been announced. Caleres said the deal will expand its portfolio and boost its presence in men's footwear.
    Diane Sullivan said Allen Edmonds "is a great strategic fit for our growing men’s business, and it will allow us to rapidly expand our men’s portfolio with a proven winner in the category."
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    Diane Sullivan said Allen Edmonds "is a great strategic fit for our growing men’s… more

    "We understand how special the Allen Edmonds brand is to its current consumers, and we plan to take it forward in a careful and disciplined way. We welcome their extensive knowledge and expertise in the men’s category," Caleres CEO Diane Sullivan said in a statement. “We see tremendous opportunity around Allen Edmonds’ direct-to-consumer business, which represents 75% of current sales. We’re also eager to explore their manufacturing resources, as we continue to focus on our ability to increase our speed to market.”

    Caleres, formerly Brown Shoe Co., is expected to reveal more details on the deal at its fourth quarter earnings call.

    “Allen Edmonds is a great strategic fit for our growing men’s business, and it will allow us to rapidly expand our men’s portfolio with a proven winner in the category. We feel the brand is well positioned for growth and we’re looking forward to working with the team to help make that happen," CFO Ken Hannah said in a statement.

    Wells Fargo Securities served as financial adviser to Caleres in the deal.

    “With nearly a century of heritage and innovation, Allen Edmonds is an ideal fit for Caleres,” said Paul Grangaard, president and CEO of Allen Edmonds, in a statement. “As part of the company’s Brand Portfolio, we’ll be sharing our men’s footwear knowledge and expertise, while simultaneously benefitting from the brand development, materials sourcing, product development and design capabilities inherent in a much larger footwear organization.”

    Clayton-based Caleres reported $34.7 million in profit during the third quarter, up from $34 million during the same quarter last year. Revenue was up 0.5 percent to $732.2 million

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    • #17
      Originally posted by ryn View Post
      I think that AE has a loyal following and not much competition in its niche segment of the market. Also they list the number of steps in the manufacturing process. If they change the number, we will know.

      There is not much reason to worry.
      Originally posted by evanparker View Post
      mark my words, they will start by using more bonded leathers, and outsourcing more and more to DR, and then to india, and it will just worse and worse and snowball until an AE shoe is equivalent to a florsheim from india.

      it's going to be a really wild horrible ride guys.
      Exactly. This story has played out again and again with the same result. In some cases like with Cole Haan, they will continue to try and sell trashy Indian/Chinese shoes for the same price. It's not because AE changed ownership, but it's because of who bought AE. They are a profit driven, mass quantity driven company. It's really all in the article. "Expand" , "brand developing" and "material sourcing". It's very unfortunate they sold it to the highest bidder and not to someone who cares about shoes.---on the bright side this will secure Alden as the only and quintessential USA shoe company. But overall a sad day.
      Last edited by MNJ83; December 14, 2016, 07:49 AM.
      You can never have enough shoes

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      • #18
        guess my timeline for "the next couple pairs" just got bumped. think i'll head to the new clarksburg store on sunday for those liverpools i've been wanting. walnut strands and.......eh, meermin from here out i suppose. :\
        https://www.professorhorseyhead.com

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        • #19
          I wonder if their recrafting operations will also turn into a junk fest clown show. I mean, think about that. You send a pair to be redone and they come back as Chinese shoes, basically.

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          • #20
            I bet they will start making shoes out of cardboard and feathers.

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            • #21
              Well this sucks, hopefully they will keep making their shoes in the USA with the same quality of materials and construction, but I think history tells us there is a good chance that will not be the case.

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              • #22
                OMG I better start making my own shoes from human skin to keep quality consistent NOW.

                While I'm not a shoe industry analyst, like apparently everyone on this thread seems to think they are, here are my two cents who dabbles in investing and works in related fields:

                As someone said earlier, AE has been changing hands tons and this comes up each time it has. If I recall correctly, all of the recent owners have been private equity firms... i.e., people who don't give a flying F about shoes and only care about the bottom line. While the current buyer is (I think) the first strategic buyer (vs. financial buyer), and not the ideal one in terms of potential for possible decrease in quality, I wouldn't jump ship because you see some ice in the water yet. Where Caleres is currently in the men's footwear market, it would actually make a lot of sense in terms of diversification for them to maintain AE as a niche/bump up in quality relative to their other brands, as that is where AE has its foothold in the market (US brand, made in US, etc.). Lastly, if they wind up changing AE like some other brands, it won't happen overnight.

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                • #23
                  Isn't it the current thinking that male consumers are increasingly conscious about buying quality clothing and apparel? If so, it would make sense that a shoe giant would want a part of that higher end of the market. It seems they have enough low and middle end brands, so why would they torpedo a brand which has everything the market seems to want right now?

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                  • #24
                    Originally posted by Rocco View Post
                    Isn't it the current thinking that male consumers are increasingly conscious about buying quality clothing and apparel? If so, it would make sense that a shoe giant would want a part of that higher end of the market. It seems they have enough low and middle end brands, so why would they torpedo a brand which has everything the market seems to want right now?
                    Because the shareholders demanded higher profit margins?

                    Sale to a publicly-traded company can either be a boon or the final nail in a proverbial coffin.

                    I hope desperately it's the former. Time will tell, but I'm likely to make a few quick purchases of things I've had my eye on, and then wait it out for a bit to see what develops.
                    https://www.professorhorseyhead.com

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                    • #25
                      TBH I am not all that concerned that this change in ownership is going to result in drastic changes to AE's business model or products. AE's value as a brand lies in its reputation for quality and for continuing to make its products in the US when virtually all other men's dress shoes are made overseas. AE's primary customer base is older, affluent businessmen and professionals who buy AE shoes because they are and always have been the name in American dress shoes. Many of these customers have likely been buying the same shoes from AE for decades.

                      If you strip those things - the American-made label and the reputation for quality, longevity, and consistency - from the AE business model you will very quickly strip AE of most of its value as a business.
                      Ben

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                      • #26
                        AE had prided itself on shoeing the Presidents of the United States for some time. They are a premium brand, and their fan base consists of people who want high quality. If Caleres debases Allen Edmonds, they will destroy everything that makes Allen Edmonds a valuable asset. If they reduce quality, they will alienate what is currently a loyal customer base. Hopefully they are intelligent enough to recognize that. The Allen Edmonds name stands for something. What good is acquiring the name if they are going to $hit all over it? Of course they might anyway, but I'm trying to be optimistic.

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                        • #27
                          I remain skeptical if only because both Johnston and Murphy and Florsheim were both held in similar regard to Allen Edmonds at one time. Then Caleres (however it's spelled) came along and....well, now we discuss "vintage" Florsheims because the new stuff just doesn't cut it.

                          I truly hope nothing changes at AE. But I'm also not going to let myself be surprised (however I'll still be very disappointed and saddened) if it does, based on previous post-purchase changes from the same parent company.
                          https://www.professorhorseyhead.com

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                          • #28
                            Originally posted by Mr. Charles View Post
                            If Caleres debases Allen Edmonds, they will destroy everything that makes Allen Edmonds a valuable asset. If they reduce quality, they will alienate what is currently a loyal customer base. Hopefully they are intelligent enough to recognize that. The Allen Edmonds name stands for something. What good is acquiring the name if they are going to $hit all over it? Of course they might anyway, but I'm trying to be optimistic.
                            That loyal customer base is relatively small. Put A&E in malls, playing up the history and the name and charge the same money for cheaper shoes sold to more people = better margins for parent company.

                            There is a chance they'd maintain it as a made in USA heritage brand, but history suggests that is unlikely, though the current political environment is something of a wild card.

                            If I was a betting man, I'd wager on a small line of made in USA shoes remaining at a premium price point, and the bulk of the brand pushed offshore.
                            Don’t call what your wearing an outfit. Don’t ever say your car is broke.
                            Don’t sing with a fake British accent. Don’t act like your family’s a joke.
                            --Jason Isbell

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                            • #29
                              They were owned by Private Equity groups, not companies that operated other shoe companies

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                              • #30
                                Originally posted by Benjamin Polyester III View Post
                                I bet they will start making shoes out of cardboard and feathers.
                                hahahaha thank you!

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