Allen-Edmonds Fits Private Equity


Allen-Edmonds Shoe Corp., one of the best-known names in men's footwear, has been acquired by a private-equity firm in Minneapolis, Goldner Hawn Johnson & Morrison, BusinessWeek has learned.

The deal, expected to be announced later on July 20, extends a string of takeovers of apparel and retail outfits by private-equity groups this year and deepens Goldner Hawn's recent investments in consumer-products businesses.

Allen-Edmonds has annual sales of roughly $100 million today, with revenue rising by more than 5% a year. It is also "significantly profitable," says Michael Sweeney, managing director of Goldner Hawn.

The companies are not disclosing an exact price, but Sweeney said in an interview that Goldner Hawn paid more than $100 million.

"I LOVE THE SHOES." primary="true" /> Allen-Edmonds, founded in 1922 in Wisconsin, owns 25 retail shops in 12 states and the District of Columbia, as well as two stores in Europe. The privately held company also sells through major retailers, including Nordstrom (JWN), Saks Fifth Avenue (SKS), and the Marshall Fields unit of Federated Department Stores (FD).

Allen-Edmonds targets the well-heeled man. While slipper prices start at $125, its dress and casual shoes typically sell for more than $225, with some retailing at $450.

Sweeney, who says he and his partners have long been Allen-Edmonds customers, began looking at the company nine months ago. Why? "It's the shoes," he says. "Remember that old Remington razor commercial, 'I liked the product so much I bought the company?' I love the shoes."

NO OFFSHORE SHIFT. Goldner Hawn, thanks to its greater access to capital, plans to expand the Allen-Edmonds' retail operations, adding its own stores and lining up new partnerships. "This is a $500 million brand," Sweeney says.

The company also still manufactures entirely in the U.S.; its flagship factory is at its headquarters in Port Washington, Wis., a Milwaukee suburb. No layoffs are planned among the company's 700 employees. Nor are there any plans to shift manufacturing offshore.

"Most people would be led to believe you can’t make shoes in America anymore. But Allen-Edmonds does it, and does it very efficiently," Sweeney says. "This isn’t slash and burn, drive efficiency, get rid of all the chaff. This is the opposite of that. This is finding a fabulous Midwestern business. From a manufacturing standpoint and a quality standpoint, the company is already there."

OTHER DEALS. Allen-Edmonds had been owned by its president and chief executive, John Stollenwerk, 66, who bought from the family of founder Elbert W. Allen in 1980. Stollenwerk will stay on as chairman. Mark Birmingham, 36, who had been chief operating officer, will move up to CEO.

Goldner Hawn, which began in 1989, has made 26 equity investments in its history, valued at more than $2.5 billion altogether. Lately, it has been moving from middle-market industrial and commercial companies toward retailers. Earlier in 2006, it purchased Westlake Hardware of Lenexa, Kan., the largest Ace Hardware dealer in the U.S., with 80 stores.

It lost out last year, however, in a $1.3 billion bid for another chain, ShopKo Stores. Shareholders of the Green Bay (Wis.)-based retailer instead chose Sun Capital of Boca Raton, Fla.

SEEING OPPORTUNITIES. Sweeney says Goldner Hawn isn't migrating toward retailing because it wants to become a retailer. Rather, he says, it's making more buys in the sector because many retailers are undervalued or out of favor these days.

Other private-equity groups have been snapping up retailers and apparel outfits, too. On June 30, Blackstone Group and Bain Capital Partners teamed up to offer $6 billion for Michaels Stores (MIK), an arts-and-crafts chain with 897 sites. Boston-based Bain also paid $2 billion for Burlington Coat Factory and its 367 stores earlier this year.

Meantime, a group led by Leonard Green & Partners of Los Angeles acquired Sports Authority, which has 398 sporting-goods stores, for $1.3 billion.

Stollenwerk says he will spend at least some of the cash from Goldner Hawn to help the schools of the Catholic Archdiocese of Milwaukee, by providing scholarships and money for teacher training and capital investments.


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