01 Nov Allen Edmonds as part of Men’s Wearhouse?
When he’s on the job, Tim Sheehy sees a lot of Allen Edmonds shoes.
Sheehy, president of the Metropolitan Milwaukee Association of Commerce, said Allen Edmonds shoes, crafted in Port Washington, Wis., and worn by executives, celebrities and even regular guys who are willing to pay $300 or so a pair, are the “gold standard” for men’s footwear in the business community. Sheehy himself has been wearing them for more than 30 years.
“They have an international reputation for their shoes, but here at home, there is a sense of pride in walking in them because they’re made here,” Sheehy said.
But some are starting to wonder what might happen to the widely recognized, made-in-America Allen Edmonds brand if the company is sold.
Allen Edmonds Shoe Corp. Chief Executive Paul Grangaard confirmed last week that the company, which is owned by the Minneapolis private equity firm Goldner Hawn Johnson Morrison, is listening to inquiries from potential buyers. The Wall Street Journal reported that Men’s Wearhouse Inc. is interested in acquiring Allen Edmonds.
To some retail analysts and marketing professionals, the prospect of Allen Edmonds becoming part of Men’s Wearhouse just doesn’t seem right.
“I’m sure from the perspective of Men’s Wearhouse, they’re eager to get a big well-known brand like Allen Edmonds,” said consultant Dick Seesel, owner of Retailing in Focus in Mequon, Wis. “I’m just not sure how compatible it is.”
Allen Edmonds’ styling is more traditional than the apparel sold at Fremont, Calif.-based Men’s Wearhouse, and the price points of the two companies are different, he said.
“Men’s Wearhouse is really a mass-appeal menswear store,” Seesel said. “I’m not exactly sure how a limited-distribution, expensive brand like Allen Edmonds fits into that brand profile.”
Former Marquette University marketing professor Dennis Garrett said Allen Edmonds and Men’s Wearhouse don’t appear to be a good match.
“There is the risk that if Allen Edmonds did get bought by a company that’s perceived by consumers as being at a lower position point in the marketplace, that really could diminish and cheapen Allen Edmonds’ position in the marketplace,” Garrett said.
Allen Edmonds’ reputation revolves around making high-quality shoes in the U.S. for men who can afford them. The company says Presidents Ronald Reagan, George H.W. Bush, Bill Clinton and George W. Bush all wore the Allen Edmond’s Park Avenue-style shoe at their inaugurations.
While in recent years the company has adapted to the less-formal business fashion climate by adding lines of more casual, rubber-soled shoes, its classic dress shoes are on display just about anywhere CEOs formally gather.
Allen Edmonds’ branding was enhanced under the ownership of John Stollenwerk, who, with some partners, purchased the shoemaker in 1980 from descendants of the founders. Stollenwerk later bought out his partners and built the brand into one known around the globe.
When Stollenwerk sold the company in 2006, he was looking for a buyer that wouldn’t simply integrate the production of Allen Edmonds shoes with its own overseas factories. Almost all shoes worn in the U.S. today are made outside the country.
Goldner Hawn bought Allen Edmonds for $123 million, and has kept production in Port Washington, where the shoemaker has about 500 employees.
When the recession hit in 2008, Allen Edmonds fell on hard times and couldn’t keep up with its debt. But Goldner Hawn gave it a $10 million capital infusion, which allowed for its debt to be restructured and for Grangaard _ who left a position at Goldner Hawn _ to run Allen Edmonds and launch a plan to get the company back on solid financial footing.
Often the strategy of private equity firms is to build up companies and then sell them at a profit. Now may be that time for Allen Edmonds. If it is, some are hoping for a buyer other than Men’s Wearhouse, which itself currently is the target of an unsolicited takeover by rival men’s retailer Jos. A. Bank.
“From a public relations and marketing point of view, I find this to be a mismatch,” said Meir Kahtan, president of Meir Kahtan Public Relations in New York City. “Allen Edmonds is a high-quality product I associate with great materials and workmanship. If I were publicizing such a partnership, I’d find it very hard to explain, unless Men’s Wearhouse were to suddenly transform its offerings and rebrand itself, even down to its name.”
Kahtan, himself a longtime wearer of Allen Edmonds shoes, said a deal with high-end retailer Brooks Brothers would seem to be “a far more meaningful match, from a product and quality point of view.”
Garrett said upscale retailer Nordstrom or Jos. A. Bank would be better fits as acquirers of Allen Edmonds.
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Grangaard said last week Allen Edmonds is listening to multiple potential buyers because it wants to grow and expand _ it recently started selling men’s apparel and changed its slogan from “The Great American Shoe Company” to “An American Original.”
Garrett said it is unknown whether a deal would allow the shoe company to maintain its high-quality image with consumers.
“It remains to be seen if the current owners are that focused on that. Or are they just intent on getting their money back at a premium?” Garrett said.
Seesel said it would be a mistake for an acquirer to mess with how Allen Edmonds shoes are produced and marketed, but the buyer might not care.
“A big company like Men’s Wearhouse, they wouldn’t make an acquisition like that without intending to put their stamp on it in some way, including, I assume, selling it in their own stores,” Seesel said. “In order to produce the shoes in the volume that would require, you almost have to source it overseas.”
Sheehy said it was important to keep an open mind, given what Goldner Hawn _ an owner from outside the state _ has done to improve the company. He said without the efforts of Grangaard and Goldner Hawn to pull Allen Edmonds out of crisis during the recession, the company might not be here today.
“Before we say all suitors are bad news, we’ve got to look at what happened,” Sheehy said.
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PHOTO (from MCT Photo Service, 202-383-6099): ALLENEDMONDS-MENSWEARHOUSE