Dive Brief:
- Designer Brands, the parent company of DSW Designer Shoe Warehouse, announced Monday that it has acquired Topo Athletic, which focuses on performance athletic and outdoor footwear. Designer Brands did not disclose the acquisition’s financial terms.
- Tony Post, Topo’s founder and chief executive officer, will stay on as CEO, reporting to Designer Brands President Bill Jordan, according to a company press release.
- The move follows Designer Brands’ strategy to expand its owned brands portfolio.
Dive Insight:
The acquisition of Topo Athletics will help Designer Brands grow its private label and owned brand penetration and its assortment within the running category.
In its most recent earnings, Designer Brands said owned brand sales grew 25% year over year. That follows 68% year-over-year revenue growth in owned brands earlier this year. Designer Brands also reported that third-quarter net sales increased 1.4% to $865 million, gross profit decreased to $285.8 million from $313.6 million last year and net income was $45.2 million. The company reported $415.5 million in debt at the close of Q3 versus $227.9 million last year.
Designer Brands explained in a statement that the company has guaranteed access to owned brands for a set period. Some are owned outright, while others are available through licensing agreements.
“Designer Brands continues to control its destiny with more than 30 million customers in its loyalty programs, more than 700 points of distribution and three online platforms that total more than $1 billion in sales,” Jordan said. “Following our most recent year-over-year quarterly sales increase of 25% in Owned Brands and 33% within our Direct-to-Consumer channels, we are confident Topo will continue to strengthen our Owned Brands portfolio and help extend our reach around the world.”
Private labels lend the potential to improve margins for retailers. The company earlier this year said building out its portfolio of brands “allows us to control our own destiny with access to the brands our customers love.”
DSW joins other retailers – Target and Macy’s among them – in pursuing a private label strategy.
For Topo’s part, the acquisition provides the brand access to additional resources.
“Nothing really changes in our strategy, distribution direction or the management team,” Post said in a statement. “Designer Brands brings a deep set of resources that will help Topo continue to grow, innovate and deliver a better experience for our customers for years to come.”
Before starting Topo, Post was senior vice president of product and marketing at The Rockport Company. He also served as CEO of Vibram USA and launched Vibram FiveFingers minimalist shoes.
In addition to Topo, the Designer Brands owned brands portfolio includes Jessica Simpson, Crown Vintage, Mix No. 6, Lucky Brand and Kelly & Katie. Designer Brands acquired LeTigre this summer.
