Women’s apparel is expanding in the traditionally male-dominated world of Hartmarx.
Hartmarx Corp., based in Chicago and known for men’s suits under the Hart Schaffner Marx and Hickey-Freeman brands and several men’s casual and golf lines, acquired Sweater.com, the Los Angeles knitwear producer of the brand One Girl Who …, on Aug. 29.
The acquisition is part of an evolving strategy for the manufacturer, which bought two other women’s lines — Simply Blue, a denim producer of the Christopher Blue line last year, and Exclusively Misook, a bridge knitwear line, in 2004.
Women’s apparel sales, now 20 percent of Hartmarx’s total, are outpacing men’s and could grow to 30 percent, possibly through acquisitions, said chief executive officer Homi Patel. He is especially interested in companies with a creative approach, like Sweater.com. Sweater.com will contribute $15 million in sales to Hartmarx’s total volume of about $600 million.
“We have a formula [for acquisitions] to let entrepreneurs be entrepreneurs,” Patel said. “We can add value, and help them strategically, but we won’t tinker with what works.”
Building the women’s brand portfolio is a way for Hartmarx to break its dependence on mainstream department stores, a sector that has become a tough place to do business because of retail consolidation.
“Changing ownership, in the short term, has retail management focused on other things, and in the long term, it creates fewer stores with more buying power and more private label,” Patel said. “It’s antithetical to what we do.”
Hartmarx bought Sweater.com., parent of the One Girl Who … brand, for a cash payment at closing of $12.4 million and additional contingent amounts payable annually over a five-year period beginning Dec. 1, if specified earnings are achieved. The deal included a five-year contract to retain the Sweater.com management team, including Bruce Gifford, president, and Dan Jaffe, executive vice president.
Gifford founded Sweater.com in 1998. The original e-commerce business failed with the dot-com bust, but the company retained the name and Web site as the parent of the One Girl Who … line of luxury and novelty sweaters that was launched in 2002.
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The diverse knitwear collection features 120 to 200 items a year, including basics, novelty sweaters, T-shirts and leather jackets with knit components. At wholesale, bridge prices range from $22 for a basic knit T-shirt to $175 for an appliquéd leather jacket. With 1,000 retail accounts, the company cultivates specialty store loyalty by giving them exclusivity (not selling to discounters), offering special order and reorders and jumping on trends early.
The specialty store channel was a big part of Sweater.com’s appeal for Hartmarx.
“It’s a more stable retail environment,” said Patel, who added that the stability offset the challenge in women’s apparel of providing customers with more innovation and fashion than the more stolid men’s market required.
One Girl Who … targets a 30- to 55-year-old customer, and invests as much as 10 percent of its budget in marketing and branding. Each season promotes a new aspirational message with a word, such as “wisdom” or “courage,” engraved on metal ring tags inside each garment and used in marketing materials. The company sponsors and participates in charity events, such as the annual California Governor & First Lady’s Conference of Women and Families, hosted by Maria Shriver.
With the backing of Hartmarx, the company will seek to build its Sweater.com e-commerce business, adding more lines to the site, which was relaunched last February, selling mostly the One Girl Who … brand. The company also plans to expand into bottoms.
Hartmarx reported second-quarter sales of $152.6 million, compared with $145.7 million in the year-ago period, and earnings of 10 cents per diluted share versus 15 cents in the same period last year.