Restructuring at Kellwood leads to layoffs and changes in operations

On July 2, SNEWS® first broke the news Sun Capital was restructuring Kellwood into four separate entities and in our SNEWS View we stated that we hoped this did not mean layoffs. It did not take long for the restructuring axe to fall, however, as by the next week, those dreaded meetings to inform staff that their services were no longer needed began.

On July 2, SNEWS® first broke the news Sun Capital was restructuring Kellwood into four separate entities and in our SNEWS View we stated that we hoped this did not mean layoffs (click here to read).

It did not take long for the restructuring axe to fall, however, as by the next week, those dreaded meetings to inform staff that their services were no longer needed began. One who received walking papers had been at Kelty 27 years, we were told.

Though no one would confirm details on the record, insiders told SNEWS what has occurred thus far and offered insight into what might be expected through the rest of 2008. Here is what SNEWS knows to date:

1. American Recreation Products has now been re-formed into three distinct divisions. Slumberjack no longer exists as a separate division and the brands within that division, which include Browning, Slumberjack and the Wenger license for outdoor products in North America, are now under the Kelty division. Both Kelty and Sierra Designs now form what is being referred to as the Boulder Outdoor Specialty Group. The second division is Royal Robbins, operating, as before, independently out of Modesto, Calif. And the third division is what is known as the Mass Market Business and includes Wenzel and its licensees and it remains operating out of St. Louis, Mo.

2. Geoff O’Keefe, who has been the president of the Slumberjack division since May 2007 (click here to read that story), now heads up what is being referred to internally as Shared Services, which includes operations, finance, customer service and marketing. His title is vice president, we are told. His division serves both Sierra Designs and Kelty and to some extent, Royal Robbins. Kenny Ballard remains president of Kelty and Paul Gagner continues as president of Sierra Designs.

3. As many as nine employees have lost their jobs in Boulder and as many as 14 in St. Louis, we have been told. It is rumored that the Glasgow facility may be on the chopping block, as well as another 30 jobs by the end of the year -- but again, no company executives would confirm or deny this on the record.

4. George Grabner remains at the helm of ARP.

5. The company position we were told, again, off the record, is that the restructuring has been done to gain needed efficiencies and to ensure each brand is able to continue to operate as a fully independent and viable business. To that extent, even though there are now shared functions between companies, each brand (Royal Robbins, Sierra Designs, Kelty, Slumberjack, Browning and Wenger) remains entirely separate in terms of product development and sales.

SNEWS® View: Insiders told us that Gagner, Ballard and O’Keefe are putting shoulders together to ensure the work they have been doing for the last two years to grow the company does not become derailed by the reorganization and loss of staff. This does not surprise us at all, as the three are good friends who have little ego invested in this other than a collective desire to see all that has been accomplished in restoring brand positions (certainly with SD) not get derailed -- a potential in any downsizing and restructuring of this scope dictated by private equity likely eager to see an investment show returns sooner rather than later.

We are surprised a bit at what is being viewed by many as a dismantling of a growing Slumberjack division. On the other hand, if a company is going to create a shared services division, you certainly could not ask for a more able or talented person to run that efficiently and profitably than O’Keefe.

While we have not met the folks from Sun Capital, and are sure they are fine folk, this is one of those times when we would question if the decision to reorg with a sterile dollars-and-cents approach to business is in the best interests of not only the industry, but of the retailers these brands serve and, closer to home, the people whose families depend on the jobs that are being moved about or eliminated like so many chess pieces on a board. If Ballard, Gagner and O’Keefe were not on board this ship, we might be more inclined to say it’s in danger of sinking. As it is, we hope Sun Capital quickly starts listening to their advice and stops dictating a future with deaf ears and blind eyes.


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