Footwear retailer DSW (DSW 29.84, -2.84, -8.69%) posts decent
declines on Wednesday, giving back the majority of late August’s
earnings-related gains, after the company announced a deal to acquire the
operations of Camuto Group in addition to a deal with marketing and
entertainment company Authentic Brands Group whereby the two parties will
acquire several intellectual property rights from the Camuto Group under a new
As mentioned, DSW entered into a definitive agreement to acquire the operations of Camuto Group for a total consideration of approximately $375 mln. Per the deal, Camuto Group will maintain its existing headquarters in Connecticut and will manage its dedicated wholesale and third-party design relationships independently of DSW Inc's retail business.
DSW will contribute about $200 mln to acquire all of Camuto Group's global production, sourcing, and design infrastructure, including operations in Brazil and China and a new, state-of-the-art distribution center in New Jersey, in addition to existing working capital of around $100 mln. DSW will also acquire the licensing rights for the Jessica Simpson footwear business, as well as the footwear and handbag licenses for Lucky Brand and Max Studio. The company will also acquire joint venture participation in the ED Ellen DeGeneres and Mercedes Castillo brands currently managed by the Camuto Group.
DSW Inc. will also contribute approximately $56 mln to acquire a 40% stake in the intellectual property of Camuto Group's proprietary brands with Authentic Brands Group taking the majority stake of 60%. Brands include Vince Camuto, Louise et Cie, Sole Society, CC Corso Como, Enzo Angiolini, and others. The partnership will focus on licensing the brands across existing lines in footwear, handbags and jewelry, and new category development with a focus on building out each brand's lifestyle offerings. Authentic Brands Group will hold a majority stake in the joint venture and will be responsible for the development, growth and global marketing of the brands.
Recall that in July ABG reportedly beat out DSW to acquire the Nine West and Bandolino from bankrupt Jones Apparel Group. Camuto has been in the headlines for the better part of the past year as investors have been anxiously awaiting the group’s next deal in the aftermath of the called-off Aldo Group acquisition. In October of 2017 Aldo Group called off the buyout of Camuto’s footwear and accessory businesses, though it still maintained a strategic partnership with the footwear and accessories retailer.
After giving up the 50-day simple moving average (30.56) this morning shares of DSW find some support in the technical indicator as the stock trims today's losses to 8.7% vs 9.7% at lows. DSW still holds a 41.5% gain year-to-date vs the 6.7% gain in the S&P 500.
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