Geared Up

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Geared Up
Kids’ Stuff: Brett Jordan

Editor’s Note: This story has been updated. A previous version incorrectly reported that Exxel makes most of its products in the United States. Most of its sleeping bags are made domestically, but other products are made in Asia.

Whether you need an inexpensive Hello Kitty daypack for your daughter or a rugged and pricey Kelty backpack for your weekend trek, Exxel Outdoors has you covered. At least, now it does.

The City of Industry company, which has long made the kind of sleeping bags and backpacks you’re more likely to find at a slumber party than in the Sierra Nevadas, this month bought American Recreation Products, the maker of Kelty and other serious outdoor gear brands.

Exxel has been trying for years to expand into higher-end products and spent two years convincing American Recreation’s former owner, Kellwood Co., a subsidiary of private equity firm Sun Capital Partners Inc., to sell, said Harry Kazazian, Exxel’s chief executive.

The combined company, which will be called Exxel Outdoors LLC, will be able to offer camping and outdoor equipment for everyone from experienced backpackers to backyard campers, he said.

“What we’ve been able to do with the new LLC is to provide to customers from the opening entry level to the midlevel and to the high end,” Kazazian said. “Not many companies can provide all those segments to the camping industry. We can cover a lot, from A to Z.”

Exxel Outdoors will move its headquarters to Boulder, Colo., a hub for the outdoor industry, though Kazazian and Exxel Chairman Armen Kouleyan will stay in Industry. Brett Jordan, American Recreation’s former chief executive, will become Exxel’s president and stay in Boulder.

While neither Exxel nor Kellwood would disclose terms of the deal, Kazazian said Exxel funded the purchase with cash, as well as financing from San Francisco’s Wells Fargo & Co. and Boston lender Pathlight Capital.

Kazazian declined to give revenue figures for the individual companies, though Jordan said American Recreation’s revenue exceeded Exxel’s. Combined, Kazazian estimates the company will bring annual revenue of less than $200 million.

New trail

Exxel makes sleeping bags, camping chairs and backpacks under a handful of its own brand names, including American Trails and Suisse Sport, as well as under licensing agreements with Walt Disney Co. and Hello Kitty – think Hello Kitty fold-up chairs and Buzz Lightyear sleeping bags.

Most of Exxel’s products are sold at big retailers such as Wal-Mart, Target and Big 5 Sporting Goods, and used for casual camping trips and sleepovers.

American Recreation’s Kelty and Sierra Designs brands, on the other hand, are for more serious outdoor enthusiasts – ones who shop at specialty retailers such as Kent, Wash., outfitter Recreation Equipment Inc. and are willing to pay higher prices for more rugged goods.

For years, Exxel has wanted to diversify and capture that higher-end, higher-priced specialty outdoor market, Kazazian said. The company tried in 2011 with the launch of its short-lived 180 South line of tents, packs and sleeping bags, a brand the company quickly retired. In 2013, Exxel tried again with the introduction of its Ticla camping gear.

While that second attempt proved more successful – Ticla tents and other products are sold at REI and San Diego chain Adventure 16 – Kazazian said launching those brands was tough and drove him to pursue American Recreation and its stable of better-known brands.

“It’s so hard to build a brand,” he said. “It made us realize it was much better to buy a car than to build a car.”

That was the attraction for Exxel. For Kellwood Co., based in the St. Louis suburb of Chesterfield, the deal was an opportunity to sell a company that didn’t fit in with the rest of its portfolio. Its other companies, such as apparel firms XOXO and Rebecca Taylor, make women’s and kids’ clothing, leaving American Recreation as an outlier that operated on its own.

“American Rec was a very different business from their apparel portfolio,” said Jordan, the former American Recreation executive who’s now president of Exxel. “It was never really a fit and that was why it was operated independently.”

Kellwood, which had bought American Recreation in 1988 when it had a broader portfolio, agreed, saying Kellwood’s core focus is now women’s and girls’ fashion. American Recreation “does not fit that strategic focus,” the company said in a written statement.

Different paths

Although the same company will now be making Hello Kitty sleeping bags that sell for $20 and Sierra Designs sleeping bags that sell for upwards of $300, the different product lines will take different paths to consumers.

Exxel’s core, inexpensive products will continue to be sold at mass-market retailers, while Kelty, Sierra Designs and other American Recreation brands will sell at specialty outdoors retailers.

But there will be some consolidation. Both Exxel and American Recreation have offices in China, where they source many of the materials that go into their products. The combined company will merge those offices and source operations into Exxel’s Shanghai office.

Merging manufacturing operations is the next step. Both companies make most of their products in Asia, but most of Exxel’s sleeping bags are made at the company’s 300,000-square-foot manufacturing plant in Haleyville, Ala.

Jordan said one of the company’s first priorities will be to review which American Recreation products can be made in Alabama.

Kazazian said that will eventually mean that plant will need to be expanded – and that American Recreation’s brands will soon be able to be advertised as “Made in the U.S.A.”

“It’s what consumers want more of, and it’s quicker to market, less volatile, better quality,” he said.

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