by R. Asmerom
What is Baby Phat without its spokesmodel Kimora Lee Simmons? Kellwood Co., the parent company to the urban fashion line, is apparently optimistic about that answer. Ever since the epitome of ostentatious celebrity indulgence announced that she would be leaving Baby Phat to focus on other endeavors, news has been circulating that Kellwood Co. actually fired Lee Simmons, although that has yet to be officially confirmed by reps.
Even though Baby Phat represents one of the first urban female centered lines to hit it big after debuting in 1998, it has not been immune to the wear and tear that accompany the life cycles of many popular labels.
“The brand has performed consistently well for the last few years, but in my opinion is getting a little “long in the tooth,” said Kristin Bentz, a retail industry veteran who writes about consumer retail stocks. “Like Juicy Couture, it tapped in to a certain demographic at a key moment in time and capitalized on that, but when recession rears its ugly head that target consumer gets stretched, and the brand undergoes stress. Brands like Juicy and Baby Phat that are fun and frivolous, but not classic luxury brands, are great– until the tide turns.”
Lee Simmons spun off BabyPhat from then husband’s Phat Farm line and quickly began to make a name for herself outside of being a former model married to a media mogul.
In 2004, Kellwood Co. bought Phat Fashions from the Simmons for about $140 million, retaining Lee Simmons as its creative director. It wasn’t clear how much Lee Simmons continued to influence the fashion direction of the company since then but it was always clear how much of a role she played in the company’s promotional campaigns. She and her two daughters appeared in many of the advertisements and many speculate that it may have been her expensive shoots and fees to herself amidst budget concerns that led Kellwood to cut her off.
“Whenever you have these celeb-designer creative directors, appeasing them and their lifestyle is fine while the money is rolling in,” said Bentz. “But these are desperate times at retail, and company managements have to answer to every dime spent. So, it’s no surprise to me that Kellwood allegedly sent her Jimmy Choo’s walking. This is not new–Versace went through this, Valentino had huge issues with this with Permira. Its just the nature of creative leaders–they like excess. And unfortunately we are now in the salad days of retail.”
Kellwood was in the news for being in some financial trouble last year. Then, the company, which is a major supplier to department stores, was thought to be on the brink of bankruptcy as sales slumped amidst weak consumer confidence during the recession.
“Kellwood did have some “nail-biting” moments financially about a year ago until it worked out terms on an $140 million exchange of its notes with Deutsche Bank and other bondholders” said Bentz, adding that the company has been getting more aggressive with key acquisitions as of late. “Typically its a positive sign when a company begins acquiring new brands, and Kellwood seems to be holding its own in an extremely Darwinian time in retail. With discounts the rule of the day, middle market brands are getting killed trying to compete as more aspirational brands lower prices to remain competitive.”
With Kellwood CEO Michael Kramer actually looking to “double [the company's] size in the next 6 to 9 months” it’s not clear whether Lee Simmons removal was a cost cutting measure or one involving creative concerns. While independent financial figures couldn’t be found for Baby Phat specifically, Kellwood was estimated to have generated $800 million in sales last year according to The Wall Street Journal. Whatever the case, Lee Simmons won’t be falling on hard times as she has several other ventures, including a reality series, apparel lines and a line of fragrances, to prop her up.
