WeSC, under pressure in Sweden for declining profits and its lower stock price, will no longer operate directly in the U.S., which has been a “burden” on other operations, the company said.
Instead, the company has signed a 10-year licensing agreement with Oved Apparel Corporation, which has the Staple, Mecca, PRPS, Company 81 and Modern Culture brands.
WeSC began operating directly in the U.S. in 2004, and CEO Greger Hagelin lived in the states for a few years to get the U.S. division launched.
“We have in recent years made significant investments in the brand in the U.S. market without success capitalizing on the value built up. Our U.S. operations, from a profitability point of view, have been a burden on our other operations. This agreement gives us a good return on the investments we have made thus far, while it frees up human resources and capital. In addition, we get a partner to the U.S. market with an existing infrastructure that will continue to invest in the brand,” WeSC CEO Greger Hagelin said in a press release.
WeSC will receive 10% of Oved’s WeSC sales as royalty fees. WeSC estimates it will earn 115 Swedish Kroner (US $15 million at current exchange rates) over the course of the agreement.
Oved will take over all the offices and infrastructure in the U.S. except for two stores in New York and Los Angeles.
I am checking to see what this means for WeSC’s U.S. staff.
