RetailSails

RetailSails has learned that Iconix Brands has signed an exclusive licensing deal with Sears Holdings for its Bongo Brand. Ever since the merger of Kmart and Sears in 2005, the combined Sears Holdings has been way behind the apparel curve and failed to create any national brands, while competitors Kohl’s, J.C. Penney, Walmart and Target have significantly increased their exclusive and private label presence.

Bongo is one of 21 brands owned by Iconix, and is currently sold in mid-tier department stores. We estimate the main jeans brand in both junior and girls has been in the range of at most $30 million in volume, while shoes, accessories, etc. does a lot less than that. Another brand of Iconix – Mudd – went exclusive with Kohl’s in late 2008, and we estimate volume in that brand went from about $100 million to $500 million since the deal was signed. Based on that experience, we estimate Kmart/Sears can easily do well over $200 million on Bongo in the first year alone.

Since the merger, most people have questioned whether Sears is a retailer or a hedge fund, and they have woefully under-invested in stores. Most of upper management was made up of hedge-fund wizard Eddie Lampert’s former friends and colleagues from the financial world, rather than executives with retail experience. However, we believe two recent hires could represent a turning point in the company’s fortunes.

John D. Goodman, who previously served as chief apparel and home officer until 2005 for Kmart and was most recently CEO of Charlotte Russe, was brought back on to head the apparel and home businesses in November. On Monday, Sears hired apparel veteran Tara Poseley as SVP and president – Kmart Apparel, who was most recently President of Bebe Sport and Disney Stores North America.

Obviously, one brand and two hires are not going to change the fortunes of a company that has seen revenue decline from $53 billion in 2006 to an expected $43 billion in 2009. However, we believe the Bongo deal is a sign of things to come, and with proven veterans at the helm of the apparel business Sears should be able to make up some lost ground against rivals.