Finally gaining some long needed financial support, Danskin Inc. reached an agreement to sell The Danskin brand to Iconix Brand Group for $70 million. The activewear and dancewear company, founded in 1982, rode the popularity of aerobic exercise in the early 80s to become one of the leaders in womens workout gear. But Danskin has struggled to fully capitalize on its roots due in part to financial turmoil, management turnover, as well as a heightened competition in its core womens activewear market.
“Basically it allows us to go forward as a much better capitalized company,” Danskins CEO and president Carol Hochman told Sports Executive Weekly. “That in a nutshell is the most important part of the whole thing. We had a lot of bank debt and it made it tough to market the brand and move it forward. We were living to serve the bank.”
Since joining Danskin in 1999 from Liz Claiborne, Hochman has dramatically reduced its SKU count to focus on higher-margin products while also focusing more on specialty and sports accounts. She broadened distribution by launching the Danskin Freestyle line at Target in 2000, becoming one of the first sports brands to sell a diffusion line at mass retail. A Danskin Now program followed at Wal-Mart, including an organic-cotton yoga line. Still, she said her efforts were stymied by an under-capitalization of the business.
“(The merger) leave us in a much better capitalized situation and we have some great marketing partners now at Iconix,” said Hochman.
Iconix, formerly Candies Inc., describes itself as a brand management company that licenses brands to retailers and manufacturers primarily in the apparel and footwear industry while providing advertising and promotional support. Since moving to a licensing model in 2003, Iconix has acquired Badgley Mischka in 2004; Mudd, London Fog, and Mossimo in 2005; and Ocean Pacific in 2006.
“Danskin is one of the most established and recognized activewear brands in the world and we are thrilled to add it to our portfolio and to be partnering with Carol and her team as our licensee,” said Iconixs CEO Neil Cole.
“This acquisition will further our diversification strategy by giving us a strong presence in the rapidly growing active wear, yoga and fitness market.”
Danskin activewear has gained a strong foothold at Nordstrom and specialty sports accounts such as REI, Sports Chalet and Paragon. At more mainstream sporting goods chains, Danskin has faced stiff competition in the womens business from Nike, adidas and Under Armour.
Hochman describes Danskin as “holding our own” in the competitive sports channel. But she said the brand is doing “extremely well” with its triathlon product that has given it a lot of attention in the “real core sporting goods community.”
She noted that Danskin has clearly benefited from its ownership of the Danskin Triathlon Series as well as its ownership of five of the top 10 triathlons. “That really geared to the performance customer who is indeed a sporting goods customer,” said Hochman.
Under the terms of the agreement, Iconix has acquired all Danskin intellectual property, with Danskin, Inc. entering into a license agreement with Iconix to continue to operate the Danskin wholesale business, including its freestanding retail stores and e-commerce site, Danskin.com. The purchase price of $70 million may include another $15 million, payable in cash or stock, if the brand exceeds certain revenue and performance targets. The deal is expected to close in March.
Donald Schupak, Danskin's chairman said, “Carol Hochman and her team have done an exceptional job expanding this great brand and implementing a multi-channel distribution strategy in a markedly undercapitalized environment. In addition to providing working capital, Iconix marketing support will help complete the company's vision for the brand.”
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