In November 2021, the first step of a significant ‘roll-up’ in the retail uniform marketplace was announced, with the announcement of the sale of family-owned and operated Landau Uniforms to a Texas-based private equity firm named LKCM Headwaters Investments. 

A few months later in March 2022, LKCM Headwaters Investments announced a broader transaction – the acquisition White Cross and Scrubs & Beyond, and combination of these two businesses with Landau to form a new entity names Kindthread (‘Kind’ is the attitude, warmth, and sentiment of its business’s leaders and ‘Thread’ refers to the product – get it?).

These transactions created a vertically integrated food service and medical uniform company that controls all facets of the uniform retail marketplace: uniform design and brands, manufacturing capabilities, ecommerce sites, chain of retail stores and a tiered distribution network selling into third party independent uniform retailers. 

While most uniform manufactures have launched or acquired ecommerce sites that effectively complete with their retail store customers, no other uniform vendor other than Kindthread owns and controls a major chain of physical retail stores.  This gives Kindthread unrivaled ability to develop a fully integrated manufacturing, distribution and omnichannel sales offering.

In this two part-article, we will first look at the transaction and assets, and in the second part we will examine how the trend towards vertical integration in certain retail segments is impacting independent retailers.

The Timeline

On November 3, 2021, the Landau Family announced the sale of a majority stake of its Landau Uniform business to LKCM Headwaters Investments. 

  • The Landau Family retained a minority stake in the business. 
  • Financial terms of the acquisition were not announced.
  • Landau owns healthcare and food service apparel brands Landau, Urbane, Chefwear, and iD by Landau.
  • As part of the acquisition, David Murphy, former President & CEO of Barco Uniforms, was named CEO of Landau. 
  • The new management team announced included David Aquino as Chief Operating Officer and Michael McCarthy as Chief Revenue Officer. Both David Aquino and Michael McCarthy previously worked at Barco with David Murphy. 

On March 15, 2022, LKCM Headwaters announces the formation Kindthread

  • Kindthread is a new company formed from the acquisition by Headwaters of three companies: Landau, White Cross and Scrubs & Beyond. 
  • David Murphy was named CEO of Kindthread.  
  • Kindthread will be based in Scottsdale, Arizona.

The Brands

  • Landau/Urbam – Landau was founded over 70 years ago and was owned and managed by the Landau family.  During this time, Landau has grown to become one of the leading suppliers of uniforms globally through popular brands Landau, Urban and iD by Landau.  Landau is estimated to generate about $300M in annual revenue. Landau is based in Olive Branch MS with manufacturing facilities in Honduras.
  • Chefwear – Chefwear was founded over 30 years ago by a former chef with a focus on providing fashionable and comfortable apparel for foodservice employeess.  Landau acquired Chefwear in 2015 for an undisclosed amount.  Chefwear is based in Chicago and is estimated to generate about $15M in annual revenue.
  • Scrubs & Beyond was founded in 2020 and at the time of acquisition by Kindthread operated 113 stores in 30 states nationwide as well as one of the largest scrubs-based ecommerce sites. Scrubs & Beyond kickstarted its growth in 2013 with the purchase of the assets of Life Uniforms out of bankruptcy for $22.6M.  This acquisition included 116 Life Uniform branded stores, and established Scrubs & Beyond as the largest retail of scrubs in the US.   Scrubs & Beyond is located in St Louis MO and has estimated revenue of $210M annually.
  • White Cross is based in Quebec Canada and has 100+ years of experience producing high-quality apparel for medical professionals.  Its products are distributed in Canada, North America and Latin America.  White Cross is estimated to have around 25 employees and revenue of around $5M annually.

The Money

LKCM Headwaters is a middle market private equity firm that invests primarily in industries in the manufacturing, energy, financial services and health care sectors.  In 2012, LKCM Headwaters was spun out of Luther King Asset Management, a money management firm with about $18.2B of assets under management.  LKCM Headwaters is based in Fort Worth Texas.

In 2020, LKCM Headwaters announced its third fund, with raise totaling $600 million.  LKCM had previously raised a $350M fund and a $8M technology fund.

LKCM Headwater investment strategy is to invest in platforms that they believe will achieve strong growth through organic initiatives and/or add-on acquisitions.  Headwaters partners with the existing management teams or leading executives seeking to transform a business.  They invest or acquire primarily middle market private and family-owned businesses.

The Headwaters investment in Kindthread is led by Michael D. Bornitz, Partner at LKCM Headwater Investments. During his time with LKCM, Mr. Bornitz has served in numerous roles, including sourcing and analyzing new investment opportunities, acquisitions and dispositions, and performance improvement initiatives post-transaction. Mr. Bornitz currently serves on the boards of Quality Magnetite, Buckhorn Waste Services, Alliance Sports Group, Leading Quality Assurance, Wishbone Medical and Intuity Medical. Mr. Bornitz graduated from Texas Christian University, with a BBA in Finance and a Masters in Accounting.

The Players

David Murphy, Chief Executive Officer – David Murphy is CEO of Kindthread, responsible for setting the vision and strategic direction of the company. David claims to be dedicated to serving and transforming the healthcare apparel industry while driving positive community impact.  Before leading Kindthread, David served as President & CEO of Barco Uniforms for 10+ years – transforming Barco from a family-run business into a global leader in the healthcare apparel industry. David began his career at Nike.  David received his BS from the University of Iowa and lives with in Scottsdale, Ariz.

David Aquino, Chief Operating Officer – David Aquino is the COO of Kindthread, responsible for leading company operations and technology development.  Before joining Kindthread, he was the Founder and CEO of Certain Supply, a distributor of personal protective equipment. David’s prior experience includes being COO and CIO for SharkNinja, COO and CIO for Barco Uniforms, and as a senior manager at Aramark Uniforms. Dave received his BS in Marketing from Syracuse University and his MBA from Fordham University. He lives in Irvine, Calif.

Michael McCarthy, Chief Revenue Officer – Mike McCarthy is responsible for leading the company’s sales, partner and growth strategy, including implementing multi-channel sales and distribution strategies on a regional, national and global level. Prior to joining Kindthread, Mike was the Head of Sales & Marketing at Image Solutions and prior to that, he served as the VP of Sales for Barco Uniforms.  Mike received an Undergraduate degree from Champlain College and an MBA from Sejong University. He lives in Scottsdale, Ariz.

The Strategy

The Kindthread formation transactions created a fully vertically integrated uniform company focused on the food and medical services markets that controls its product offerings from the initial design through the sale to the end customer. 

Careismatics started the direct-to-consumer trend with the acquisition of Allheart in 2010.  This acquisition enabled Careismatics to sell direct to the end user via is own online platform while maintaining its traditional distribution relationships with independent retailers of medical uniforms.

The Kindthread formation takes this a step farther – combining well known uniform brands (Landau, White Cross, Chefwear) with a strong omnichannel platform (Scrubs & Beyond retail stores and the website) and an established tiered distribution system to independent uniform stores.  This vertically integrated business allows Kindthread to serve healthcare and food service customers regardless of their preferred method of shopping and fulfilment. 

And Kindthread does not appear to be finished.  David Murphy and his team have demonstrated ability to quickly scale this platform – as evidenced by the four-month window between the Landau acquisition and Kindthread formation.  The sponsorship of Headwaters (with a freshly raised $600M fund) will provide additional capital to invest in these brands and supply chain and omnichannel technologies, as well as to pursue additional complimentary acquisitions to expand product offerings, service capabilities, and geographic footprints. 

Kindthread is also focused on expanding its leadership team, bringing in new managers from inside and outside the uniform industry with significant expertise across supply chain, retail, sales, design and apparel – with particular focus on enhancing capabilities in marketing, digital and creative services.

In Part Two of this article, we will explore potential growth strategies in more detail and the impact on independent uniform retailers.