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Wolverine World Wide has sold Sperry to brand management firm and Reebok owner Authentic Brands Group, as the footwear retailer looks to focus on better performing assets, the company announced Thursday.
Canadian retailer the Aldo Group has been tapped as the brand’s North American operating partner and will be in charge of wholesale, e-commerce and store operations, Authentic said in a news release. Aldo will also work with the brand on footwear design, production and global distribution. It already works closely with Authentic on running brands like Roxy and Brooks Brothers.
The deal will generate $130 million, which Wolverine plans to use to pay down debt, it said.
Wolverine originally acquired Sperry, a 90-year-old brand, in 2012 from Payless ShoeSource owner Collective Brands in a $1.23 billion deal that also included Saucony, Stride Rite and Keds.
Wolverine, which runs a portfolio of apparel and footwear brands that includes Merrell, Hush Puppies and Sweaty Betty, said in May it was seeking strategic alternatives for Sperry after it realized the investments the segment needed would be better served in other parts of its business.
“It just became apparent that Sperry was going to continue to require investment that was going to take away from where we think the upside is,” Wolverine’s then-CEO, Brendan Hoffman, said on a call with analysts in May after the company reported fiscal first-quarter earnings.
He said the decision would allow Wolverine to put more resources behind expanding Merrell’s lifestyle business, extending Saucony’s reach beyond its core active and lifestyle consumers, and stabilizing Sweaty Betty’s home market in the U.K. and Ireland.
Retailers slim down
Wolverine’s decision to sell Sperry comes as retailers look to streamline their businesses and focus on growth drivers by carving out their underperforming assets as they navigate an increasingly uncertain economy.
In November, Calvin Klein’s parent company, PVH, sold a trio of lingerie and intimates brands – True & Co., Warners and Olga – to Basic Resources for $160 million. Walmart, meanwhile, offloaded Moosejaw, Bonobos and Eloquii in a series of transactions earlier in the year.
Before its decision to sell Sperry, Wolverine made a deal to sell Keds to Designer Brands, the parent company of DSW, for more than $90 million. It sold the Hush Puppies intellectual property in China, Hong Kong and Macao for $58.8 million. It also has plans to sell its U.S. Wolverine Leathers business for $6 million.
The retail industry has seen consumers pull back on spending as they face persistent inflation, high interest rates and most recently, the resumption of student loan payments. But the footwear and apparel sectors have felt that pressure acutely.
Foot Locker has reported quarter after quarter of sales declines, and even Nike has started a $2 billion restructuring as it prepares for what it called a “softer” revenue outlook.
In the three months ended Sept. 30, Sperry posted just $46.2 million in revenue, a 41.4% drop from the year-ago period, when it saw $78.9 million in sales.
While slow sales at Sperry have dragged on Wolverine’s overall business, the downturn has created an enticing entry point for Authentic, which is in the business of buying struggling brands at attractive valuations and then putting in the resources necessary to revive them.
Now that Sperry is part of Authentic’s portfolio, it plans to grow Sperry’s product offerings including rainwear, sportswear, bags and accessories in a bid to expand its market share globally.
“We are excited to bring Sperry into the Authentic platform,” Jamie Salter, chairman and CEO of Authentic, said in a statement. “Sperry’s influence extends far beyond fashion, embodying a lifestyle that celebrates exploration. We look forward to launching Sperry into a new era alongside ALDO Group, an incredible partner and leader in the footwear industry.”
In November, CNBC reported that Authentic competitor WHP Global was also interested in buying Sperry. At the time, GlobalData retail analyst Neil Saunders said Authentic’s and WHP’s interest in Sperry, as well as Hanesbrands‘ Champion line, made “perfect sense.”
“They have a good operational backdrop that they can integrate these brands into, whether that be through licensing, through international expansion, through getting them into physical retail more, through selling them direct to consumer,” Saunders said previously. “They almost have an operating model that you can just sort of drop brands into and start seeing better performance.”