Last December, Topo Athletic, known mainly for its running footwear, was acquired by Designer Brands, Inc. (DBI), the DSW family footwear chain parent. The sale comes as Designer Brands pushed into the athletic footwear category, including the February 2023 acquisition of Keds. In July 2022, DBI acquired a stake in Le Tigre and an exclusive license for Le Tigre footwear.
Here, Tony Post, CEO, discusses the reasons behind the sale, how the merger impacts its core specialty business and what categories have driven growth.
Before founding Topo in 2012, Post was CEO of Vibram USA through the birth of the FiveFingers movement. He had previously led product and marketing roles at Rockport.
What drove the sale to Designer Brands? Topo had another shareholder planning to exit after several years of solid growth and profitability. The management team and I remained committed to the brand’s vision and purpose, so we sought another partner to buy the available shares. We had a lot of interest from private equity and strategic investors, but, in the end, DBI was the best fit for a variety of reasons.
Why was Designer Brands a good partner from an operational standpoint? We weren’t just looking for a deal with the highest immediate return; we were seeking a business partner that understood our goals, our values as a company and one who would have great synergy with our management team. DBI brought half a dozen team members to our first meeting; they demonstrated a high level of interest right off the bat.
DBI President of Brands, Bill Jordan, is an avid runner with a nine-year streak of running five-plus miles every day. He and others at DBI were already fans of Topo; they loved our signature fit and feel and appreciated the key product features and our story.
From a strategy perspective, DBI was interested in diversifying its portfolio and especially keen on gaining market share with a company like Topo in the premium specialty athletic market. We also valued the autonomy DBI offered—we could remain in control of strategic and operating decisions, including the products we make, where we make them, how we price, who we sell to… everything. We could keep managing the business toward the long-term goals we shared. Importantly, DBI agreed that Topo was a sit-and-fit brand best served in specialty distribution. There was never any pressure to sell in DSW stores or non-specialty stores just because they offered more revenue; they supported our distribution strategy 100 percent. At the same time, DBI brought a wealth of knowledge and resources we couldn’t get on our own or with a PE deal. They are shoe people; they understand the market and the rhythms of the business; they assisted us with legal, tax, HR compliance, and many parts of the business where we were looking for additional support as we grew. There were also many logistical benefits tied to DBI’s size and scale, such as lower shipping rates for our customers.
Why did the fit work from a cultural standpoint and align with Topo’s mission? The fact that DBI was deeply entrenched in the footwear business was a great start. Creating an agreement, apart from the sale, that gave us autonomy in managing the business and strategy was also huge. They are supportive while still giving us our space. Essentially, they told us, “We want you guys to run this business. You are the experts, but use us in any way you think we can help you grow and be successful.” They are savvy business people, but they are also kind and respectful. Those are values that we share. And now, despite Topo being a small part of their overall business, they’ve always made us feel valued and important.
What does the sale and distribution to DSW mean for Topo’s core business selling to run specialty and outdoor specialty? Are you planning a more segmented approach to family footwear versus specialty channels? DBI embraced our specialty distribution strategy from the beginning, and it’s one of their goals to expand channel diversity in the DBI portfolio through acquisitions like Topo. We can remain specialty focused in our distribution even while many competitors sell more broadly. I hope specialty retailers recognize how protective and selective we are with our distribution, especially compared to some of the biggest run brands.
Topo could easily sell to other non-specialty stores to grow our revenue, but that would be detrimental to our current dealers and our long-term vision for Topo. We are vested in the growth potential of specialty retail. We offer a high-quality product that delivers consumer satisfaction, high-maintained margins, select distribution, a growing aesthetic appeal, and a great consistent fit—giving specialty dealers something they don’t often find with our competitors, all with growing brand awareness.
What questions or concerns are you hearing from your specialty partners? Interviews like these are important to help us get the word out to as many dealers as possible. We’re so appreciative of the service you provide to our retailers and the industry through your reporting. On the day of the announcement, I emailed all of our dealers and followed up with dozens of phone calls explaining many of the same things I’m doing here. I’ve also been traveling around the country to try and meet with our dealers face-to-face.
The bottom line is that I want consumers and retailers to understand that the mission and goals of Topo remain the same—we make products that make running, trail running, walking, or hiking better. That’s our purpose. Our product fits better and feels better. People already tell us that all the time. Doing so makes you more comfortable, so you might exercise more often, get out the door more frequently, or go a little longer because it feels good. And if more people do those things, they might become healthier and live a better life. That’s a purpose I can feel good about; that’s the real value in Topo.
What questions or concerns are you hearing from your specialty partners? Interviews like these are important to help us get the word out to as many dealers as possible. We’re so appreciative of the service you provide to our retailers and the industry through your reporting. On the day of the announcement, I emailed all of our dealers and followed up with dozens of phone calls explaining many of the same things I’m doing here. I’ve also been traveling around the country to try and meet with our dealers face-to-face.
The bottom line is that I want consumers and retailers to understand that the mission and goals of Topo remain the same—we make products that make running, trail running, walking, or hiking better. That’s our purpose. Our product fits better and feels better. People already tell us that all the time. Doing so makes you more comfortable, so you might exercise more often, get out the door more frequently, or go a little longer because it feels good. And if more people do those things, they might become healthier and live a better life. That’s a purpose I can feel good about; that’s the real value in Topo.
Topo celebrated its 10th anniversary in 2022. What big lessons have you learned from starting a brand from scratch? Our first product launched in August 2013, so we’re celebrating our 10-year anniversary this year. Creating a brand from scratch is hard. It’s been a roller coaster, but we try to be good listeners while staying true to our purpose. I’m so grateful for this experience, for the team we have, for the challenges we faced, the lessons we’ve learned, and the successes we’ve shared. I love the growth and contributions of our Topo team; they are the reason this brand is on the rise. The improvements we’ve made in our product, our process and the clarity of our vision all result from strong teamwork and our dedication to keep improving. But, most importantly, I never want to lose sight of our vision and purpose. We make products that make running, trail running, walking, or hiking better. That’s our purpose. If we do that for our customers, we just might help people get out the door a little more often, or go a little longer, be healthier, and maybe live a better life. That’s our purpose and it’s something all of us at Topo can all feel very good about.
Photo courtesy Topo
