ABG LICENSING MASTERY
How do you achieve a revenue of £353 million ($489 million) in the retail industry without making anything, operating zero stores, and not managing any supply chains, especially during a pandemic? Ask Jamie Salter, CEO of Authentic Brands Group (ABG) and he’ll be sure to provide a succinct and enlightening answer like this one:
“We are brand owners, curators and guardians. We are a licensing business and are purely focused on brand identity and marketing.”
That’s what Salter wrote in a letter to some potential investors. For ABG, licensing is the name of the game. Of its total $489 million revenue in 2020, $471 million was derived from licensing, being $469 million the previous year.
THE BIRTH OF ABG
In 2010, Salter resigned from his CEO position at Hilco Consumer Capital and decided to launch a brand management company. He approached private equity investment firm, Leonard Green & Partners, for backing, telling them that
“The brand industry was broken and over-retailed, burdened by legacy cost and inefficiency, and not equipped to win in the ongoing digital transformation.”
His pitch was successful and ABG was born and continues to grow from strength to strength.
THE SECRET OF SUCCESS
Why has the Group entered territory where angels would fear to tread, taking on the likes of failed brands such as Juicy Couture and Barneys New York? For successful brand acquisitions, Salter explained that you need to tap extensive financial resources, follow a roadmap, and that practice makes perfect. He said
“Prior to completing any acquisitions, our management team employs a deliberate approach of establishing a licensee base and distribution network for the acquisition target, thereby significantly reducing the execution risk associated with the onboarding of our brands. By leveraging ABG’s scaled distribution platform and network of licensees, we are able to efficiently drive growth post-acquisition.”
ABG IS EVERYWHERE
Unquestionably, ABG has the secret to licensing success, cornering a retail market worth more than £9 trillion. In 2020, during the coronavirus pandemic, its 30 plus brands through 800 global partners, raked in retail revenue of £7.2 billion. Not bad going for a start-up founded in 2010. That said, ABG collectively has 270 million followers on social media platforms and a widespread network of distribution points across 136 countries. Salter confidently said:
“You can’t swipe Instagram or drive down the street without experiencing ABG.”
$300 BILLION VERSUS $13 TRILLION
Farfetch CEO, Jose Neves, believes that his global platfrom will become the ‘operating system’ of the £216 billion ($300 billion) luxury industry. This pales in comparison to ABG’s massive opportunity in the retail sector of £9 trillion ($13 trillion). ABG is also beginning to dabble in luggage, food and beverage, and children’s products, and with Salter at the helm, is looking to invest in alcoholic beverages, consumer electronics and mobile payments. It seems like the sky will be the limit for the brand management operation.
REVENUE DERIVATIVES
In 2020, ABG’s revenue was derived from
- 31% – Fashion Brands
- 25% – Footwear
- 10% – Active Brands
- 7% – Media
- 27% – Other Categories
ACQUISITION TIMELINE
ABG’s endeavours are wide-ranging and its holdings include various apparel, athletics, media and entertainment brands, for which it partners with other companies to license and merchandise. It has also acquired the likeness rights and estates of some well know celebrities. Here is an abbreviated timeline of the Group’s acquisitions
2010 Silver Star
2011 Marilyn Monroe
2012 Zoey
2013 Elvis Presley
2013 Muhammad Ali
2013 Juicy Couture
2014 Airwalk
2015 Jones New York
2016 Jimmy Z
2017 Neil Lane
2018 Enzo Angiolini
2018 Nautica
2019 Sports Illustrated
2019 Barneys New York – retail
2020 Brooks Brothers – retail
2020 Forever 21 – retail
2021 Arrow
FANATICS VERSUS ABG
Despite ABG’s phenomenal success, Jamie Salter was not the mastermind behind global brand management and licensing opportunities. Fanatics, founded in Florida in 1995 by Michael Rubin, is an American online retailer of licensed sportswear, sports equipment, and merchandise. As of August 2021, Fanatics was valued at $18 billion, almost double the potential valuation of ABG. According to its latest report, Fanatics is on track to bring in $3.4 billion in revenue in 2021. It looks like Salter has met his match. Or not?
