Authentic Brands Group and DSW acquire Camuto; Disney gears up for holiday toy push; Sears files for bankruptcy; Target’s ‘two-buck’ brand; MasterChef unveils appliance line; a look at Christmas taking shape at Home Depot, and other licensing news highlights of the week.
Licensing, marketing and retail expert/opinion leader Tony Lisanti, provides insight and perspective for the top headlines of the week. “Licensing and Merchandising Report” is a must read for top execs who want objective, straightforward and authoritative analysis.
The Sears Story Continues
As the 125-year old retailer filed for bankruptcy, many questions remain as to whether it can emerge as a smaller, better company and survive.
Finally! This adverb is—after years of struggling with debt, antiquated systems, consolidation, downsizing and a changing retail landscape—the best way to describe the likely end of Sears as a venerable brick and mortar retailer.
The once dominating and innovative retailer that was the retail destination of choice for millions of Americans filed for bankruptcy, as expected, on Monday, Oct, 15. Key factors from the Chapter 11 filing include:
- Commitments for $300 million debtor-in-possession financing plus the company is negotiating an additional $300 million junior debtor-in-possession financing;
- The company will close 142 unprofitable stores at the end of the year and liquidation sales at these stores are expected to begin shortly. This is in addition to the previously announced closure of 46 unprofitable stores that is expected to be completed by November 2018. Additional store closings are also possible;
- The company’s largest stockholder and creditor, Edward Lampert, has stepped down from his role as chief executive officer of the company, but will remain chairman of the board;
- The Company’s board created an “Office of the CEO,” which will be responsible for managing the Company’s day-to-day operations during the bankruptcy process. The Office of the CEO will include: Robert A. Riecker, chief financial officer; Leena Munjal, chief digital officer, customer experience and integrated retail; and Gregory Ladley, president of apparel and footwear;
- The company plans to reorganize around a smaller store platform of EBITDA-positive stores;
- The company is also in discussions with ESL regarding a “stalking-horse” bid for the purchase of a large portion of its store base;
- The company expects to market and sell certain assets over the coming months;
Regardless of any clever turnaround plan that Lampert can pull out of his hat to save the company, Sears may have just reached the final curtain.
Several lenders last week, according to the WSJ, indicated that they no longer would be interested in saving Sears. This may come as no surprise to many execs considering not only Sears’ debt, but also the fact that the retailer has not demonstrated any viable business strength or profitability for numerous years. The Sears debt load totals more than $5 billion of which $134 million was due on Monday, Oct. 15.
Similar to Toys ‘R’ Us and its huge debt, liquidation may be the only alternative. The underlying question to consider is: If investors didn’t want to save TRU, why would they want to save Sears? And it’s unlikely that consumers feel any different. TRU was a far stronger retail brand in recent years than Sears, but what, if any, customer base remains other than the small group of loyal supporters that hang on in the demise of any company.
Another critical factor is whether licensees/suppliers will continue to support Sears and ship goods throughout the bankruptcy process and beyond.
Said Sears Holdings chairman Lampert, “Over the last several years, we have worked hard to transform our business and unlock the value of our assets. While we have made progress, the plan has yet to deliver the results we have desired and addressing the Company’s immediate liquidity needs has impacted our efforts to become a profitable and more competitive retailer. The Chapter 11 process will give Holdings the flexibility to strengthen its balance sheet, enabling the Company to accelerate its strategic transformation, continue right sizing its operating model, and return to profitability. Our goal is to achieve a comprehensive restructuring as efficiently as possible, working closely with our creditors and other debtholders, and be better positioned to execute on our strategy and key priorities.”
Lampert continued, “As we look toward the holiday season, Sears and Kmart stores remain open for business and our dedicated associates look forward to serving our members and customers. We thank our vendors for their continuing support through the upcoming season and beyond. We also thank our associates for their hard work and commitment to providing millions of Americans with value and convenience.”
While Lampert has made it all sound so positive and he has been a master of spin, the fact remains that Sears has not achieved its turnaround goals over the past decade and then some, nor has it achieved profitability in nearly a decade.
Therefore, for Lampert, it’s finally time to move on—sell the prime real estate that remains, sell the IP, sell Kmart, and find something else to invest in. Also, as he has previously indicated, Lampert could directly acquire key assets, including the Kenmore brand.
It’s hard to imagine a retail landscape without Sears or Kmart as much as it was to consider a holiday season without Toys ‘R’ Us. But the so-called retail apocalypse of the past few years has claimed many venerable retail victims.
Even as a strong holiday season approaches, it may not be near strong enough to make a difference to the final outcome of Sears, a story and a retailer that lingers on, but one whose fate is inevitable.
ABG Partners with DSW to Acquire Camuto
Incredible! This adjective is one of the best words to describe the continued growth of Authentic Brands Group and its most recent acquisition of the Camuto Group, the well-known footwear and accessories company.
The deal increases ABG’s brand portfolio to more than $8.3 billion in annual retail sales of licensed merchandise.
Authentic Brands Group will acquire a majority stake in the intellectual property of the Camuto Group’s proprietary brands in partnership with DSW, a leading footwear and accessories retailer, for a total of $375 million.
“We are thrilled to welcome the Camuto Group to the ABG family and forge a long-term relationship with DSW,” said Jamie Salter, ABG’s chairman and chief executive officer. “This strategic arrangement preserves the Camuto Group operation, which will continue to service its current footwear partners, and provides a robust infrastructure for new brands and growth. In addition, our partnership with DSW links ABG to a footwear authority whose sourcing and manufacturing expertise will extend across our portfolio.”
Founded in 2001, the Camuto Group, founded by the late fashion icon Vince Camuto, is best known for his successful Vince Camuto brand as well as the Jessica Simpson brand.
DSW acquires the Camuto Group’s operations businesses including its design, sourcing, production and wholesale infrastructure. DSW will also acquire the licensing rights for Jessica Simpson footwear, and Lucky Brand and Max Studio footwear and handbags. The company will also acquire joint venture participation in the ED Ellen DeGeneres and Mercedes Castillo brands.
As part of the agreement, ABG will partner with DSW to acquire the intellectual property of Camuto Group’s proprietary brands, taking the majority stake of 60% and DSW taking the balance of 40%. Brands include Vince Camuto, Louise et Cie, Sole Society, Enzo Angiolini and others. The partnership will focus on licensing the brands across existing lines in footwear, handbags and jewelry, and new category development with a focus on building out each brand’s lifestyle offerings.
Under a separate agreement, ABG will purchase the intellectual property of the Bernard Chaus Inc. (BCI) brands in partnership with Ariel Chaus, the current Chief Executive Officer and former owner of BCI. Brands include the fashion and contemporary women’s apparel labels 1.STATE and more.
“The purchase of the Camuto Group operation transforms DSW into one of the largest footwear franchises in North America. Our new design and sourcing capabilities create opportunities for us to pursue market share and become integral to more consumer purchase decisions,” said Roger Rawlins, DSW’s chief executive officer. “In addition to the licensing benefits of our strategic partnership with ABG, this acquisition allows DSW Inc. to harness Camuto Group’s product development and wholesale capabilities while supporting its growth as a global lifestyle brand.”
“The partnership with DSW and ABG creates an unmatched opportunity for the Camuto Group to expand the platform for our leading lifestyle brands,” said Alex Del Cielo, chief executive officer of Camuto Group. “By leveraging DSW’s resources, we will strengthen our wholesale business and bring to market an exciting and world-class, direct-to-consumer experience that will grow our brand equity and customer demand across additional points of sale. I believe our founder Vince Camuto would be as excited about the transaction as we are and view the opportunity as a way to extend the company’s reach and realize his vision.”
The Camuto Group will maintain its existing Connecticut headquarters and will manage its dedicated wholesale and third-party design relationships independently of DSW’s retail business. Camuto Group’s CEO Del Cielo will continue to lead the organization.
Disney Makes Major Commitment to Holiday Toys
Following the liquidation of Toys ‘R’ Us and the strategic moves of numerous retailers to grab a piece of TRU’s $11 billion in sales, the world’s largest licensor is also aggressively targeting consumers this holiday season.
This is a clever move by Disney not only to drive sales of its own merchandise in its own stores, but also enhance brand awareness and the potential to drive sales of its licensed products at other retailers as well.
The company’s Disney Store and shopDisney ecommerce store revealed the first annual “Top 15 Holiday Toys” list which features top Disney franchises including Star Wars, Marvel, Pixar and Princesses.
In addition, Disney store will release a “2018 Holiday Toy Book” on October 29 along with various other promotional and in-store events including the retailers’ special holiday store décor event on Nov. 3.
With more than 215 Disney store locations in North America, plus more than 40 Disney stores in Japan, two locations in Shanghai, China, and more than 70 Disney store locations in Denmark, France, Germany, Ireland, Italy, Portugal, Spain, and the United Kingdom, Disney is well-positioned to be a strong competitor and grab a piece of the holiday toy sales in the first season without Toys ‘R’ Us stores.
Disney store’s Top 15 toys include:
- Disney Animators’ Collection Mini Doll Gift Set – 5” ($99.95)
- Buzz Lightyear Talking Action Figure ($29.95)
- Disney Princess 11-inch Doll Gift Set ($129.95)
- Belle Tea Cart ($49.95)
- Mack Carrier with 6 Die-Cast Cars Set – Cars ($79.95)
- Mickey Mouse Clubhouse Deluxe Playset ($59.95)
- Minnie Mouse Farmers Market ($49.95)
- Marvel Universe Mega Figure Set ($49.95)
- Millennium Falcon – Star Wars Toybox ($79.95)
- The Incredible Remote-Control Vehicle ($39.95)
- Spider-Man Talking Action Figure ($29.95)
- Disney Parks Holiday Train Set ($139.99)
- Minnie Mouse Brunch Cooking Set ($29.95)
- Cinderella Castle Play Set – Walt Disney World Resort ($89.99)
- Incredibles 2 Deluxe Figure Set ($24.95)
Endemol Shine Launches MasterChef Small Appliances
In partnership with licensee SCS Direct, Endemol Shine North America will launch an all-new line of small kitchen appliances inspired by America’s most-watched cooking competition series.
Considering the popularity of the MasterChef series and its brand awareness, the new licensed collection features several specialty products and will be a strong competitor in the small appliance category.
The MasterChef collection features ten countertop appliances inspired by the show’s diverse cuisine including: air fryer, bubble waffle maker, chocolate fondue maker, cordless crepe maker, dehydrator, deluxe 8-pan cheese raclette and grill, and quiche & mini pie maker, a two-lb. programmable bread machine, electric spiralizer, and pressure cooker.
“MasterChef celebrates home cooks and the wide diversity of cooking styles throughout the country,” said Tamaya Petteway, SVP brand and licensing partnerships, Endemol Shine North America. “This collection brings a variety of easy-to-use and essential cooking companions and techniques into family kitchens and gives at-home cooks the opportunity to prepare dishes like a MasterChef.”
The Fox network series, hosted by Chef Gordon Ramsay, recently aired the season 9 finale maintaining an average 6.4 million multi-platform viewers per episode. MasterChef season 10 is currently in production and expected to return in 2019. This MasterChef kitchen appliance line is being merchandised by Amazon and Macys.com.
Target Unveils New ‘Two Buck’ Brand
As part of its aggressive launch of private label brands over the past 18 months, Target has unveiled a price-driven brand with most items under $2.
Called Smartly, the new line of more than 70 products in household and personal care is yet another competitive move by Target to create value among its shoppers and effectively compete with dollar stores and other retailers at the lower opening price points. This product line could also pose a threat to various licensed products in consumables and personal care. According to Target, Smartly products cost 70% less than similar products from national brands.
The product line, which ranges from all-purpose cleaner and body lotion, to paper plates and razor blades, will debut on Oct. 14, with new product rolling out through early 2019.
“Where we see white space and an opportunity to bring Target’s guests something differentiated, we’ll go for it,” said Mark Tritton, Target’s executive vice president and chief merchandising officer. “The introduction of Smartly to our owned brand portfolio is another example of how we are listening to consumers and bringing them differentiated solutions to make their lives easier. Smartly is affordable, looks great and most importantly, gets the job done.”
Target Develops Gen Z Incubator
Another new initiative in Target’s marketing, product development and private label brand strategy is the creation of ‘Target Incubator.’
This new program is designed to help Gen Z entrepreneurs create new businesses and provide accessibility to Target execs. While many retailers have for decades talked about research and listening to their core shoppers, Target has delivered a unique and well-organized program that not only gives them a true understanding of shoppers, but also leads to new brands that are target a core demographic and differentiate the retailer from its rivals.
According to Target, similar incubator programs have resulted in the creation of three new Target PL brands such as Wild Fable, Original Use, and Heyday.
“To truly engage our next generation of guests, it’s not enough to create great brands. We need to cultivate communities and have real conversations,” said Rick Gomez, executive vice president and chief marketing officer. “So, we’re using our expertise and brand power to connect with our young guests, amplify their voices and support their great ideas for the future.”
Potential entrepreneurs can submit an application to Target from which the retailer will select 15 finalists who in turn will be given the opportunity to pitch their businesses at Target’s Minneapolis headquarters in November. Subsequently, eight businesses will participate in an eight-week educational program. The Target Incubator will culminate with a Demo Day event where finalists will showcase their final concept.
It’s Beginning to Look a Lot Like Christmas!
The aisles were a mess, but the disruption and hard work will be worth it! It’s difficult enough to decorate one tree, but ome Dept Home Depot assembled more than 30 trees, various other decorative lawn items, wreaths, tree trim, plush figures and miscellaneous displays, including Martha Stewart licensed products and GE Home Accents, in one New Jersey store. The holiday season is upon us!