British promotional products firm Bemrose Corp PLC said Thursday it had entered an exclusive alliance with direct-selling group Lands’ End Inc. to supply non-clothing goods to corporate customers.
For three years, Bemrose will be exclusive suppler of “hard goods”–corporate-branded products ranging from ballpoint pens to coffee cups–to Lands’ End clients. The agreement also includes a warrants provision that could lead to Dodgeville, Wis.-based Lands’ End taking up to a near 10 percent stake in Bemrose.
Lands’ End, a leading on-line and catalog clothing retailer, sells $140 million worth of branded clothing to companies annually–more than 10 percent of its sales. The alliance is a response to demand for a complete line of promotional goods.
Bemrose said hard goods made up 72 percent of all promotional goods spending in the United States, while the rest was on clothing, leading to a projected $360 million in sales for Bemrose based on Lands’ End corporate clothing revenue.
“The beauty of these things is they’re long-term contracts. They’re pretty predictable. If you offer a fantastic service, there’s not a great reason people want to change,” said Martin Varley, Bemrose executive director.
The agreement with Lands’ End includes a warrant issue to buy 5 percent of Bemrose shares at 5 pounds ($7.54) once the share price reaches 7 pounds ($10.55).
Bemrose will issue warrants equal to a further 4.99 percent of the company if certain sales targets are met.
Lands’ End shares rose 19 cents, to $34.62, on the New York Stock Exchange.
