After two and a half years under the ownership of the Phoenix Footwear group, Royal Robbins has found a new home in Kellwood’s American Recreation division. Phoenix originally acquired Royal Robbins on October 31, 2003, for approximately $11.7 million and Royal has been one of PXG’s better brands.  Last year, Royal Robbins increased its sales by approximately 28% to $31.8 million compared to $24.9 million in 2005 and $21.2 million in 2005. Under the terms of the agreement, Kellwood will pay PXG $38 million, giving them a three-fold return on their investment. The transaction is expected to close in July. 


Bob Orlando, the former president of Teva that has been president of Royal Robbins since August 2005, is expected to continue with KWD.  He will report  to George Grabner, Jr., president of American Recreation Products.


Phoenix will realize a net pre-tax gain of approximately $23 million from the transaction, which will allow the company to pay down the majority of its long-term debt, bringing it down to the low-to-mid-teen levels, post closing. The rest of the proceeds will be used to further strengthen and grow PXG’s remaining brands. With the Royal Robbins divestiture, Phoenix is no longer involved in the apparel industry and will be able to focus on its footwear and accessories businesses. PXG also no longer has any outdoor brands.


While Phoenix allowed Royal Robbins to essentially run itself, the brand was a bit of an anomaly in Phoenix’s portfolio, which consists of primarily department store and mall footwear brands like Tommy Bahama, H.S. Trask, Trotters and Softwalk. Under Kellwood’s American Recreation umbrella, Royal Robbins will join other outdoor brands such as Kelty, Sierra Designs, Wenger, Wenzel and Slumberjack. Royal Robbins, with its focus on outdoor lifestyle apparel, looks to be a nice complement to American Rec.’s portfolio, which focuses on hardgoods and technical outerwear.


“We have been searching for the right outdoor apparel company to add to our division’s product mix and Royal Robbins is the perfect fit,” said Grabner.  “Their highly visible, strong consumer base enhances our positioning and allows us to accelerate our growth and profitability.”


Kellwood does not expect Royal to contribute any significant amount to its bottom-line for the coming year, primarily because a $32 million business can get lost in rounding for a $2 billion holding company like Kellwood.