“It was a matter of ‘if the shoe fits,’” Costa Mesa-based BB Dakota founder and Chief Executive Gloria Brandes said of her decision to move forward with a sale of her multibrand apparel portfolio to Steven Madden Ltd.
Long Island City, N.Y.-based Steve Madden (Nasdaq: SHOO) recently confirmed that it closed on its purchase of BB Dakota for an undisclosed sum, bringing into its fold the BB Dakota line, Jack by BB Dakota, and the licensed brand Cupcakes and Cashmere.
“We were not actively looking to be acquired, although there were multiple offers before and after Steve Madden expressed interest,” Brandes, who is traveling in Europe, told the Business Journal by email last week.
“After considering their company culture and their management and the fit of the Steve Madden brand and product with ours, we were convinced this was a great match.”
Brandes will stay on as BB Dakota chief executive and said little on a day-to-day basis will change at the company. Steve Madden said BB Dakota capped the 12-month period ended June 30 with net sales of $43 million.
Brandes reported the company, which sells a variety of shirts, dresses, pants, jackets and other apparel for women, is in about 2,000 U.S. retail doors.
More Hires
The deal, for Steve Madden, is expected to help push along its apparel segment, with Chairman and Chief Executive Edward Rosenfeld hailing BB Dakota as “the ideal platform to expand our brands in the apparel category.”
BB Dakota will bring its expertise in apparel to the footwear and accessories firm with a workforce of about 80 prior to the acquisition.
That team count is expected to increase “dramatically,” Brandes said as BB Dakota lends its help on apparel to other Steve Madden brands.
The BB Dakota acquisition came a day after Steve Madden confirmed its purchase of high-end sneaker company Greats Brand Inc. Greats, based out of Brooklyn, shot to success after its 2014 founding as part of a wave of brands born online and selling direct-to-consumer, bypassing the traditional route of selling through retailers by pitching to shoppers premium product at lower pricing by cutting out the middleman.
BB Dakota has maintained a unique positioning in the marketplace. It’s billed itself as a contemporary brand, but touted prices much lower than peers within that segment, while its designs and quality have set it off from the traditional juniors category.
Much of its product line falls in the $70 to $100 range.
The pair of deals for Steve Madden reflect two companies at opposite ends of the spectrum: one a heritage young-contemporary business founded some 14 years ago at a time when wholesale was largely viewed as the way to scale; the other, part of a wave of digital upstarts that have driven the more recent industry landscape shift to a focus on selling direct.
That’s not the only change Brandes has seen within the industry since starting the business.
“Everyone would probably agree that e-commerce was the game changer,” she said. “I would now add the rental and subscription models in retail as being the new, big wave that will leave a lot of winners and losers in its wake.”
She’s referring to upstarts such as Rent the Runway and Stitch Fix Inc. (Nasdaq: SFIX) that have gained followers and market share in more recent years from traditional retail channels, such as malls and department stores.
Adaptors
Retail’s ever-changing landscape will remain a challenge for the industry as a whole, but so will tariffs, Brandes said.
“As far as opportunity, BB Dakota and Steve Madden have been around for much longer than most contemporary fashion brands because we are great adaptors,” Brandes said.
“We know how to roll with the punches, but also how and when to ride a wave. We are well financed, so there are no money restrictions to invest in worthy projects and to fuel growth … Besides growing our existing brands, we plan to grow the whole roster of Steve Madden brands in apparel. Of course, we will do that gradually and thoughtfully as we have always done. Steve, who is one of the most talented, visionary and smart people I know and his fantastic management team and I are all veterans of this industry and we know that this industry changes every day, and we are up for the challenge.”
