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Designer Brands Acquires Keds From Wolverine Worldwide

Designer Brands Acquires Keds From Wolverine Worldwide

Designer Brands, the parent of DSW, reported it acquired Keds from Wolverine Worldwide. The company also expanded its agreement with Hush Puppies to include U.S. and Canadian licensing.

On December 8, Wolverine Worldwide reported it started a formal process to divest or license the Keds brand and the Wolverine Leathers business.

The announced transaction includes all Keds’ products, including Pro-Keds, as well as the brand’s e-commerce business. Designer Brands said this expands its Owned Brands’ reach into casual and athleisure footwear in the direct-to-consumer and wholesale channels, supplementing the recent additions of Le Tigre and Topo Athletic. This acquisition also marks Designer Brands’ first Owned Brand wholesale business within the kid’s footwear segment.

Designer Brands said it has a long-tenured relationship with Keds, with DSW already positioned as the largest wholesale customer of the brand. Bringing Keds into the Designer Brands’ Owned Brands portfolio, supported by the company’s design and sourcing organization, will support elevated expansion, including opportunities to expand beyond the classic Keds silhouette. Furthermore, this acquisition brings a large international distribution network into the Designer Brands ecosystem.

“Our growing strength in Owned Brands is evident, given that just twelve months ago, the athleisure category was a massive white space opportunity for us, and we now control high-quality brands across multiple price points,” said Doug Howe, incoming chief executive officer and president of DSW. “Our acquisition of Keds, which has an important presence in the athleisure space, is particularly exciting as it is an iconic brand with broad appeal for our customers and their families that gives us the potential to explore new opportunities both online and internationally.”

Designer Brands also announced that the company is working to finalize an agreement to become the exclusive licensee for the Hush Puppies brand in the U.S. and Canada. Designer Brands currently has an arrangement with Wolverine that began in 2022, naming DSW as the exclusive in-store distributor of Hush Puppies in the U.S., while also serving as a physical return center for customers. The new licensee relationship grants exclusivity of the Hush Puppies brand to Designer Brands across all channels in the U.S. and Canada including potential wholesaling of the brand and management of the business. The licensing agreement is targeted to take effect later in 2023.

“Today’s announcements serve as proof of both the incredible progress we have made on our strategy to double sales of our Owned Brands by 2026 as well as the ongoing benefits of our relationships with top National Brands,” said Roger Rawlins, chief executive officer. “I am incredibly excited to welcome the Keds brand into the Designer Brands’ family and to continue our journey with Hush Puppies. This next phase in our Hush Puppies relationship is yet another example of how we are continuing to build on our existing Owned Brand strategy. It will allow us to directly benefit from designing and sourcing product for the US and Canadian markets.”

In a separate statement, Brendan Hoffman, Wolverine Worldwide’s president and chief executive officer, said, “Selling Keds and licensing the Hush Puppies brand for the United States and Canada is an important step as we continue to advance our strategy to simplify the portfolio and direct resources to our growth brands. We are confident this will place Wolverine on an accelerated path to improved profitability and long-term shareholder value creation. We are particularly pleased to have reached this agreement with Designer Brands, a longtime retail partner of ours and a natural fit to guide the iconic Keds brand into its next phase.”

“Combined, these transactions will generate total cash of over $90 million, including the monetization of working capital. The proceeds will be used to pay down debt and strengthen our capital structure.”

The Keds brand sale closed effective February 4, 2023, and the Hush Puppies license is anticipated to be effective as of July 1. Wolverine Worldwide also noted that its evaluation of strategic alternatives for the Wolverine Leathers business is ongoing.

Honigman LLP and Warner, Norcross + Judd LLP served as legal advisors to Wolverine Worldwide. Solomon Partners served as financial advisor to Designer Brands, Inc., with Thompson Hine LLP as legal advisor.