Five years after the brand’s founding in Brooklyn, Greats, which makes trendy, high-end sneakers, has been purchased by Steve Madden in a deal that could end up creating a bevy of new opportunities for both organizations.
In a statement, Steve Madden said it has officially completed the purchase of the direct-to-consumer-focused sneaker brand, as well as its only retail location in Manhattan’s SoHo neighborhood, though it didn’t disclose any further details on the deal.
“We see significant opportunity to expand the business by combining Greats’ strengths—which include an outstanding brand and stylish, classic designs that appeal to today’s more casual consumer—with our proven business model, established infrastructure and global reach,” Steve Madden chairman and CEO Edward Rosenfeld, said.
The formerly private Greats brand pulled in around $13 million in net sales for the 12 months ended in June 30, 2019. As Steve Madden’s own footwear and accessories businesses earned $445 million in the most recent quarter, growing double digits over the comparable period in the previous year, Greats founder, Ryan Babenzien said the union would likely allow Greats to grow in a way it hasn’t so far been able to.
“Steve is a true maverick and is one of the people I look up to in the footwear industry,” Babenzien added. “He’s created a multi-billion-dollar footwear business from nothing and there are less than a handful of people in the world who have done that. Getting the chance to collaborate with and learn from Steve and the rest of the Madden Company to accelerate my business is something that made a ton of sense to me.”
In an interview with Sourcing Journal in June, Babenzien said Greats was more than open to expanding its retail footprint, despite its origins in the direct-to-consumer space. Greats sneakers have already appeared on Nordstrom shelves, for one, and in a new location in Venice Beach, Calif.
Times are changing for DTC brands when it comes to using cheap internet marketing to maintain “razor-thin” margins, according to Babenzien.
“In the early days of ‘DTC version one,’ 10 years ago brands were arbitraging inexpensive Facebook traffic and everyone believed that is what made DTC so exceptional,” Babenzien said at the time. “Cut out the middle man, have a better margin—but that only worked when acquisition costs were artificially low.”
As times have changed and the market for DTC brands has tightened, joining up with an organization with an established distribution system makes sense for Greats. Steve Madden ended its last quarter with 224 company-operated retail locations and six separated e-commerce outlets. Greats could also potentially be going international, as Steve Madden maintains 31 company-operated concessions in regions outside of the United States.
“Rarely in my 30 years since I started Steve Madden have I come across an opportunity as exciting as this,” Steve Madden remarked. “Ryan’s shoes are the talk among all the millennial men I encounter. He reminds me so much of myself. We can’t wait to explode this thing.”