Dive Brief:
- Authentic Brands Group is working with potential advisers on a possible initial public offering that could come this year, according to a Bloomberg report that cited anonymous sources.
- The brand specialist is eyeing a valuation of around $10 billion, though plans aren't final and that price could change, Bloomberg reported. An Authentic Brands Group spokesperson did not immediately respond to Retail Dive's request for comment.
- Authentic Brands is currently backed by the financial firms BlackRock, General Atlantic, Leonard Green & Partners and Lion Capital. The company, with over 30 brands in its stable, says it makes $10 billion a year in retail sales of its names.
Dive Insight:
Authentic Brands capitalized on a few trends to become a powerhouse in an industry growing up around intellectual properties divorced of assets like factories and stores.
Authentic Brands CEO Jamie Salter helped build the industry in the years after the Great Recession. The growth of e-commerce and expanding accessibility of the technology behind online retailing helped give rise to the brand aggregators.
"What technology did was it expanded the ability to go to market and efficiently target sectors that historically the only way you get there was you built a store," David Peress, executive vice president at Hilco Streambank, which specializes in IP sales and disposition, told Retail Dive last year.
Along with technology, Authentic Brands — along with peers including Sequential Brands, Iconix Brands and Retail Ecommerce Ventures — have taken advantage of a surplus of brand properties up for sale amid the colloquially named "retail apocalypse" of the past five years or so.
In that environment, Authentic Brands has binged on IP up for sale. On its own or through SPARC, a joint venture with Simon Property Group, Authentic Brands last year acquired the Lucky Brand, Brooks Brothers and Forever 21. This year it picked up outdoor icon Eddie Bauer. In the recent past, it bought Barneys, Nine West and Aéropostale out of bankruptcy. The company has also reportedly made a $1 billion offer on the Reebok brand.
Buying up brands out of bankruptcy is a far cheaper option than building one from the ground up. Authentic Brands and players like it further hold down their costs by licensing the brands out to partners who do the actual manufacturing of products and retailing.
What's left inside Authentic Brands is a marketing and financial machine, gobbling up brands, applying a marketing infrastructure across them, and leaving the nitty-gritty of operations and asset maintenance to others. It's been highly profitable for Authentic Brands, which historically has carried high leverage levels to fuel acquisitions.
The company's frequent tie-up with Simon also gave it a major real estate partner. That allows Authentic Brands to expand its range of acquisitions to brands that still operate physical footprints. It also expands the sales channel for its brands as Simon becomes a bigger buyer of retailers generally.
In the real estate firm's latest earnings call, David Simon said that both SPARC and Authentic Brands-owned products are likely to sell in J.C. Penney, which Simon acquired last year. In response to an analyst question, Simon said that "I would think in '22, maybe even late '21, we'll start to see a lot of the ABG brands end up in J.C. Penney."
