The family of Lululemon founder and billionaire Chip Wilson has sold its Vancouver-based fashion chain Kit and Ace to the company’s CEO, George Tsogas, and four other executives for an undisclosed amount.
The sale, which closed August 31, marks the end of a fanciful journey for the Wilsons, who founded the company with one store in July 2014 and went on an expansion spree that saw the company have 700 employees and 61 stores around the world less than two years later.
Growing pains forced layoffs, and the company’s store count fell to 41 stores in March 2017. The next month the company announced that it would close all 32 stores located outside Canada and would retrench to nine stores within Canada. The 140-employee company now has six stores in Canada and it plans to soon open two pop-up shops: one in Calgary and the other in Burnaby at Metropolis at Metrotown.
The downsizing in spring 2017 meant that in May 2017, when Tsogas was promoted to be CEO, employee morale was low and the company appeared to be rudderless.
Tsogas, however, told Business in Vancouver that he immediately set out to create a new vision for the company. That vision turned out to be to transition the brand away from technical cashmere and dressier garments, and primarily toward pants and other garments for cyclists and urban commuters. Kit and Ace is not alone in this space.
The business is now about half transitioned and Tsogas expects that the transition will be complete by January.
“I worked with the Wilsons to create a new vision for Kit and Ace moving forward, which is the modern commuter,” he explained to BIV on October 9.
He noted that the company generated its first profitable month in July and that the months since July have similarly been profitable.
Industry insiders, however, wonder how much the Wilsons wound up generating from the sale.
“This may be as much a case of Chip Wilson supporting someone loyal to him, whom he would trust fully to not tarnish the brand further – and perhaps stay close through the relationship should something good spark again,” said DIG 360 owner and retail analyst David Gray.
“Keep in mind, the original product was quite good: machine washable cashmere. The problems stemmed from a combination of a misapplied ‘fast fail’ philosophy and unnecessary scaling too quickly. Seeing this as an interesting reboot to an early stage business could be interesting with little further downside.”
Tsogas first worked for Chip Wilson when he joined Lululemon in 2003 as an assistant manager. He worked up to be Lululemon’s distribution manager, director of North American distribution and logistics, and finally vice-president of international distribution and global logistics by the time he left Lululemon in October 2015.
He moved to Kit and Ace the next month to be head of global logistics, product management and North American retail.
KIt and Ace is not the only Vancouver fashion house to focus on making pants that look fashionable yet are comfortable to wear while cycling. Dish and Duer has a showroom at 118 West Hastings where there is a stationary bike and ropes to swing on so customers can get a sense of how the clothing feels during physical activity. Tsogas said that it is possible that in the future Kit and Ace stores will similarly have stationary bikes.