Kellwood’s Next Pickup: Royal Robbins

NEW YORK – In its second acquisition in less than a week, Kellwood Co. said it had reached an agreement to acquire outdoor apparel supplier Royal Robbins from Phoenix Footwear Group for about $40 million.

Upon consummation of the deal, expected before the end of the month, Royal Robbins will become part of Kellwood’s American Recreation Products division. Robert Orlando, president of Modesto, Calif.-based RR, and his team are expected to remain with the company, with Orlando reporting to George Grabner Jr., president of American Recreation Products.

Royal Robbins’ 2006 sales were approximately $32 million, up from $25 million in 2005. The company, founded in 1968 by the renowned mountain climber of the same name and his wife, Liz, designs and markets better outdoor and travel apparel and enjoys distribution in outdoor specialty stores as well as specialty and department stores. It markets the Go Everywhere line of technical clothing.

Kellwood last Wednesday reported that it had reached an agreement to acquire upscale children’s apparel supplier Hanna Andersson for about $175 million.

“The acquisition of Royal Robbins allows us to expand our outdoor recreation and leisure products platform,” said Robert Skinner Jr., chairman, president and chief executive officer of Kellwood. “We have a very strong portfolio of brands already in the camping, mountaineering and outdoor products category such as Kelty and Sierra Designs. Royal Robbins introduces us to the outdoor apparel sector of that industry.”

Grabner said that RR’s “highly visible, strong consumer base enhances our positioning and allows us to accelerate our growth and profitability.”

In a separate announcement, Phoenix said it expects a net pre-tax gain of about $23 million from the divestiture. It acquired RR for $11.7 million in October 2003.

“Royal Robbins is an outstanding brand with strong revenues and a very loyal following,” said Jim Riedman, chairman of Phoenix, “and we are very pleased with a three-fold return we expect to achieve on this asset in just over a three-year period. This transaction represents a significant step in our plan to position our company to further enhance shareholder value. It provides a source of capital that will allow us to further pursue our growth strategy of focusing on the strengthening of our remaining brands and paying down the majority of our long-term debt.”

Phoenix produces and markets footwear under the Tommy Bahama, Trotters, SoftWalk, Strol, H.S. Trask and Altama brands, as well as Chambers Belts.

With the addition of Royal Robbins, Kellwood’s American Recreation Products unit will compete more directly with VF Corp’s Outdoor coalition, which includes such properties as JanSport, Eastpak and Eagle Creek in the hardgoods area and The North Face and Napapijri in soft goods.