Like the recent acquisition of Sebago by Wolverine World Wide and that of Converse by Nike, the deal concluded a few days ago around the American Bass brand of footwear is indicative of a trend toward the establishment of bigger and powerful multi-brand conglomerates in the footwear industry.

Phillips-Van-Heusen, the world’s largest dress shirt company, which bought the prestigious Calvin Klein label for more than $400 million last February, has decided to close all the remaining wholesale operations of its G.H. Bass subsidiary in Maine and to license this shoe brand to Brown Shoe Co., an expert in the footwear field with vast product development and sourcing capabilities and with well-oiled administration, marketing and distribution processes.

Between 8 and 10 million pairs of shoes are sold annually under the Bass brand, mostly in the USA. PVH acquired G.H. Bass from Cheesborough Pond in 1987, but it has been unable to generate anything but marginal profits from this operation, which had revenues of about $350 million last year, in spite of various reorganization measures. The group has been trying lately to develop its business in Europe, where its strongest presence for the moment is in the UK through an agent and in Greece through a distributor, Sider, which has about 13 stores of its own. PVH will continue to run Bass’ more profitable retail operations, currently consisting of about 225 stores in the USA and Puerto Rico that sell shoes as well as apparel and accessories.

Brown Shoe had a turnover of $1.84 billion in 2002 and the Bass license will easily pull the company over the $2 billion annual sales threshold. Brown Shoe, which will host the Bass brand in its own stand at next month’s WSA show in Las Vegas, plans to invest more money than PVH did on marketing around the Bass brand. Well known in the USA and other markets for its easy American style of penny loafers, outdoor shoes and boots, including its classical Weejun’s model, Bass will give Brown Shoe an entry into the casual/outdoor category, nicely complementing its Naturalizer and LifeStride brands and those of its children’s division. Brown Shoe is also a major retailer in North America with over 900 Famous Footwear stores and 400 Naturalizer stores.

Diane M. Sullivan, current vice chairman of PVH’s Footwear Group based in New York City, will join Brown Shoe with the new title of president, overseeing all its wholesale and retail operations as well as global marketing. A former executive of Rockport, where she acted as vice president of product and marketing, she then worked from 1995 to 2001 for Stride Rite Corp., where she was president and chief operating officer.

The closing of G.H. Bass’ headquarters in Maine, where the company was founded by George Henry Bass in 1876, will involve the layoff of almost 300 people, including 125 who work at its distribution center in Wilton. Under PVH’s ownership, Bass’ manufacturing plant in Wilton was closed in 1998, involving 350 job cuts, and the production was moved to Puerto Rico and the Dominican Republic, but the Bass operation remained only marginally profitable.

The 165 jobs at Bass’ headquarters in South Portland will be eliminated over the next 9 months. About 15-20 key people have been offered jobs at Brown Shoe, mostly at its headquarters in Saint Louis. Another 70-75 have been invited to move to PVH facilities in New York and New Jersey, mostly to continue to run Bass’ retailing operations.

In addition to its exit from the low-margin Bass wholesale business, PVH has announced the closure of 200 outlet stores. These moves will result in after-tax extraordinary charges of about $25-28 million for the group but they will generate about $27-30 million in positive cash flow and free up about $40 million in working capital.