Authentic brands IPO brings new vision to Wall Street – Headline 4 Ever

The Authentic Brands Group grew up on the fringes of fashion and captured companies that had apparently had their heyday – from Juicy Couture to Jones New York to Barneys New York – and gave them second life through licensing deals.

Fashion purists tended to see a piece for the past, a coordinated effort to squeeze the last few dollars out of once budding names.

But Jamie Salter, CEO, actually made a game for the future when he founded ABG in 2010 with the backing of private equity firm Leonard Green & Partners. Over the years, other prominent investors participated, including General Atlantic, BlackRock Inc. and Lion Capital as well as mall giant Simon Property Group Inc. NWell, Salter is taking the vision to Wall Street with an initial public offering that sources said could raise $ 500 million and value the big company at $ 10 billion.

A careful reading of the company’s registration statement for the IPO, unveiled last week by regulators, shows how Salter is still thinking bigger – much bigger.

Even by the standards of typical pie-in-the-sky rhetoric of pitchers of IPOs, Salter’s scope is staggering.

Where Farfetch CEO José Neves talks about an ambitious goal of becoming “an operating system” in the luxury industry of $ 300 billion, ABG identifies a total sales opportunity of $ 13 trillion. This includes the company’s current focus areas (clothing, footwear and accessories and media), categories where it starts building (luggage, food and drink and children) and then future options (alcoholic beverages, consumer electronics and mobile payments).

Salter, 58, can think so broadly because he has already managed to grow so large, posting license revenues and commissions of $ 489 million last year and reaping staggering net profits of $ 225 million. In all, ABG’s portfolios of more than 30 acquired brands generated $ 10 billion in retail sales through more than 700 partners globally last year – during the pandemic.

While established fashion companies spent the last decade migrating toward the future with a more digital approach and putting pressure on brands like Aéropostale and Nautica (both of which ABG created), Salter and Co. began. to build from scratch.

“ABG deconstructs and reconstructs the traditional model and owns only the brands, creating a decentralized network of best-in-class partners to execute the rest of the value chain,” Salter said in a letter to potential shareholders included in the legislative filing. “We are fire owners, curators and guardians. We do not manage stores, inventory or supply chains. We do not manufacture anything. We are a licensed company and are exclusively focused on brand identity and marketing. ”

Prior to ABG, Salter was the CEO of Hilco Consumer Capital Corp. as well as President of GSI Commerce. He had seen how the business worked.

“I came to realize that most brands were structured in a different era – before the digital speed and complexity of the global; obsolete, and ultimately difficult to reuse as the market and the consumer evolve, ”he said. “Being the best in the class in any competence at every step of the value chain is an impossible task for most teams, but that is what defines success in the traditional model. Insource all activities, capital requirements and risk. A large number of major brands are structured like this. ”

In his pitch to Leonard Green, Salter said, “the fire industry” was “broken” and “over-retail, burdened by inheritance costs and inefficiencies, and not equipped to win in the ongoing digital transformation.”

That pitch succeeded, and so has ABG.

Now that Salter is starting to strike again for a new set of investors on Wall Street, here are key takeaways from IPO filing that illustrate how the company is doing something new with old brands.

See brands differently

Brands are usually built with a certain manic focus, they are apparently rebuilt with an open mind.

“Most people look at Juicy and remember the luxurious tracksuit, while we look at Juicy and see the original leisure brand that has hugely untapped the consumer’s mindshare and potential for global growth,” said ABG.

“Most people are watching [Sports illustrated] and think of the iconic magazine. What they do not see is the brand’s enormous potential to grow horizontally: digital, sports betting, ticket to events and world – class immersive events. ”

Digital drives

The backbone of ABG is a massive digital infrastructure. ABG brands have a total of more than 250 million followers on social channels, where they create four billion annual impressions.

“Our expansive digital reach enables remarkably powerful data capabilities and allows us to do things I never thought possible, such as building our own digital multi-brand marketplace and subscription platforms,” ​​said Salter. “The relevance of our brands extends everywhere and anywhere – e-commerce, digital content through world-class experiences and a large network of distribution points in 136 countries. You can not iron Instagram or drive down the street without experiencing ABG. ”

This creates what the company described as a “flywheel” in which the company uses its digitally collected consumer insights to sharpen its marketing and evaluate potential brand acquisitions. Each agreement then brings in more customers, sharper insights and so on.

Ready to trade

ABG has an unusual scope, as it can chase both Forever 21 and Barney’s New York – at the same time – and win both.

There will be practice, deep pockets and a plan.

“Before we complete acquisitions, our management team takes a deliberate approach to establishing a licensee base and distribution network for the acquisition target, significantly reducing the execution risk associated with boarding our brands,” the company said. “By leveraging ABG’s scaled distribution platform and network of licensees, we are able to effectively drive growth after the acquisition.”

Forward momentum

Salter has not only big dreams, but a roadmap for ABG to make them a reality. The company’s plans for its digital ecosystem include a number of initiatives, including:

• Marketplace: ABG formed an initial partnership with RevCascade to use its dropship technology to help licensees sell products from other ABG-owned brands.

• Digital projects: The company has stock and revenue sharing partnerships with software and technology companies that target parts of the customer journey and help “scale the software or technology across our portfolio of brands.”

ABG also plans to launch a loyalty membership program across all of its brands that provides “customers discounts and perks for a monthly subscription.” And the company will centralize its branded credit card program under a co-branded card.

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