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Posted by Robert
Rap News Network
1/8/2004 3:00:59 PM
Tags and topics realted to this article include Russell Simmons.
In a historic deal between a traditional Seventh Avenue garment maker and a hot hip-hop brand, Kellwood Co. said today it is buying Russell Simmons’ Phat Fashions empire for $140 million.
Kellwood has revenues of $2.4 billion and makes traditional products such as inexpensive womenswear, dresses and men's dress shirts. At a press conference Thursday afternoon, CEO Hal Upbin said he responded to Mr. Simmons’ challenge to recognize the growth opportunity of hip-hop brands. Last year, Phat Fashions racked up retail sales of $615 million. The deal includes the trademarks Phat, Phat Farm and Baby Phat, as well as the group’s licensing organization. Mr. Simmons and his wife, Kimora Lee Simmons, designer of the Baby Phat womenswear line, will join Kellwood and continue to run their companies.
The agreement, expected to close next month, also includes long-term incentives in the form of a royalty arrangement, said Kellwood President Robert Skinner.
The deal marks the culmination of a long-held dream for Mr. Simmons, who has repeatedly chided Seventh Avenue for ignoring hip-hop brands. Kellwood gains access to an estimated $10 billion market and strengthens its presence in menswear. Kellwood first partnered with Mr. Simmons last year through licensing deals for the Run Athletics Men's activewear collection and Def Jam University sportswear for young men and women.
"I'm a much bigger philanthropist today,” said a beaming Mr. Simmons after the purchase price was announced. Dressed in conservative business suits, Messrs. Skinner and Upbin posed for photos with Mr. Simmons, who wore a black cashmere track suit, and Mrs. Simmons, who wore a Chanel suit, stilettos and plenty of diamonds. Hip-hop power players including Kevin Liles and Lyor Cohen of Def Jam turned out to support the Simmonses.
Mr. Simmons says he plans to use some of the money to register more voters, a cause he has been actively backing. He also plans to build an endowment that one of his two young daughters can run when she grows up. "I want them to go to work every day and give away money," he says.
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