Fitness EM, a specialist in accessories and women's fitness equipment and gear, will continue its six-year license to market fitness products under the Danskin Fitness name after the sale of the Danskin brand to Iconix Brand Group.
That transaction selling the 125-year-old brand of women's active wear to Iconix (Nasdaq: ICON) will close in March 2007.
"The Danskin agreement is very positive for Fitness EM," CEO Michael Savage told SNEWS®. "Their deal with Iconix will provide Danskin the necessary capital to help them grow their wholesale business and increase investment in marketing this great brand.
"As the exclusive licensee for brand Danskin in the fitness product category, Fitness EM will certainly benefit from the increased exposure. We have had a very positive six-year relationship with Danskin, and their management team and our license agreement will remain intact."
The purchase price for the transaction will be $70 million with a contingent payment of an additional $15 million, payable in cash or stock, triggered by the brand exceeding certain revenue and performance targets. The acquisition will be self-funded from the company's cash reserves.
Fitness EM (www.fitnessem.com) has a large line of about 35 to 40 Danskin Fitness-branded portable equipment products, including items for core training, Pilates, yoga, dumbbell workouts and other strength-training, balance and toning products. That is in addition to the company's "empower" line of women's strength equipment, including benches and gyms that have won awards for their simplicity and style that speaks to women's needs.
Savage said Danskin's deal with Iconix should allow Fitness EM, which began business in 1997, to grow its work with the company, allowing not only for more products, but also for more channels, including more internationally.
"Distribution for our Danskin-branded fitness products has grown substantially in multiple channels during our relationship with Danskin," Savage added. "Recently, we have expanded well beyond traditional sporting goods and specialty fitness dealers into sales channels that have had great success with Danskin-branded apparel and are primarily focused on reaching the female consumer, including department stores such as Nordstrom, housewares stores such as Bed Bath & Beyond and TV shopping, to name just a few."
As a part of the agreement, Iconix also announced it will enter into a license agreement with the seller to continue to operate the Danskin wholesale business including free-standing retail stores. The Danskin team will continue as Iconix's licensee to grow the Danskin department and sporting goods store business, a statement said.
"We have made a lot of progress expanding this great brand and implementing our multi-channel distribution strategy, but the missing ingredient has been the marketing strategy and investment needed to complete our vision," said Carol Hochman, CEO of Danskin, in a statement. "The Iconix team has exciting plans for Danskin, and I am looking forward to working closely with them to grow the business."
Iconix Brand Group (www.iconixbrand.com) owns licenses and markets a portfolio of consumer brands including Candie's, Bongo, Joe Boxer, Rampage, Mudd, London Fog, Mossimo and Ocean Pacific.
"Our vision for the women's fitness product category aligns perfectly with Danskin's vision in that women appreciate when products are designed exclusively for them," Savage said. "Considering that more than 95 percent of women are not hard-core fitness enthusiasts, we strive to develop products for them and distribute merchandise where women shop, not just where fitness people shop.
"We would love to see more of our customers recognize this critical buying demographic by marketing more aggressively and directly to women," he added.