Let the Feasting Begin: Wolverine Grabs Chaco

Scott Sible, president of Wolverine World Wide’s Outdoor Group, said the deal came together in the last 30 days. Chaco founder Mark Paigen insisted on closing the sale before Outdoor Retailer Winter Market opened in the hopes that rumors of a potential sale of his brand in the middle of a day would not be a good position for Chaco.
Paigen says the economic downturn and tight credit markets led to the decision to sell Chaco.  “These are challenging times for business. Partnering with a strong strategic partner was the best way to move the brand forward.” 

The compressed timetable for the acquisition kept principals focused on financial details of the deal.  Paigen will continue with the brand and all Chaco employees have been assured employment with Wolverine World Wide through the transition.  Decisions about marketing, brand position and product development were left for future discussions.

“We certainly don’t have all the answers and don’t know what we are going to do but we see the opportunity,” said Sible. 
Paigen added, “They came to me and said there’s a lot to learn about your brand and Chaco’s business. We need to learn and understand those things before we can make those decisions.”

Known for an extremely loyal following, Sible and Paigen believe that passion for the brand can be maintained and expanded. Paigen points to the Outdoor Group’s work with Patagonia Footwear in reinforcing brand perceptions. “It’s my expectation that Wolverine’s Outdoor Group will leverage on that loyalty and create more Chaco advocates,” he said.       

Pointing out Wolverine’s distribution network in 115 countries, Sible says, “Chaco has an extremely loyal following. We are going to do everything in our power not to disappoint the core, but there’s also an opportunity with people who have never heard of Chaco. There’s a big upside. I think it’s a perfect fit for us.”

In the second acquisition announcement in as many days at Outdoor Retailer Winter Market, Deckers Outdoor Corp. announced an agreement to acquire the Ahnu outdoor footwear brand.  Ahnu will join the UGG Australia, Simple Shoes, Teva and TSUBO brands in the Deckers brand portfolio.  Ahnu founder and CEO Jim Van Dine said the deal has been in the works since early November and discussions accelerated over the last few weeks. 

Mr. Van Dine and other key management founded Ahnu in 2006 after leaving Keen Footwear, where Van Dine was president and current Deckers Chairman and CEO Angel Martinez was CEO.  The Ahnu launch was supported by a minority investment by specialty retailer REI.  Sources close to the deal told The B.O.S.S. Report that REI has voted their shares in favor of the deal.

The deal was apparently seen as another brand rescue operation as Ahnu struggled to finance its growth in the current economic environment. Van Dine acknowledged that tight credit markets played a role in the decision to sell.  “For a small emerging brand like ours, capitalization and cash flow are all-important.  As we look down the road, we can see that situation won’t get better for some time to come. It’s been very difficult in terms of lines of credit and working with the investment community. We wanted to make sure we had the runway needed to fully develop the brand. We didn’t want to wait until there was a crisis mode.  We wanted to do it while we were healthy.”
“We feel that Deckers provides an accelerant to our growth,” said Van Dine, with upside from the resources in distribution, product development and sourcing.

Van Dine said prior relationships with the Deckers management team created a sense of trust that the Ahnu philosophy will be maintained.  He said Ahnu’s brand position focuses on building performance running, hiking and lifestyle footwear with environmentally sustainable business practices. Concerns for the environment and social responsibility rank as high as innovative product design. Ahnu’s products are manufactured at one of only 31 footwear factories in the world with SA8000 accreditation. Social Accountability International creates standards that foster social responsibility in business.

“Our brand position fits in well with their portfolio,” said Van Dine. “Our management philosophy, strategic thinking and our values in what is important to develop a brand are very similar. There’s not a lot of due diligence that needs to be done on the strategic side. Ultimately any relationship is about fit.”

The transaction is expected to close by the end of the first quarter. Van Dine and the Ahnu management team will remain with the brand and continue to operate out of Alameda, CA – at least for now.