Authentic Brands Bids for Meredith’s Sports Illustrated; Target launches another PL brand; Hasbro and Mattel report Q1 with different spins; Tom Brady tops NFLPA merch sales; plus other top brand licensing and retail news.
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 for the retailers, licensors and brands.
Authentic Brands Makes Play for Sports Illustrated
With 50 brands in its portfolio and $9.3 billion in annual retail sales of merchandise, privately-held Authentic Brands Group has reportedly entered the bidding for Sports Illustrated. This may seem like an unusual move for the global brand management company that has become a licensing juggernaut with top brands in fashion, entertainment and sports. While it would immediately place ABG in the sports media business, which is not the company’s focus, there are numerous dotted lines that could connect the company’s existing brands with SI.
When combined with the Sports Illustrated brand, ABG’S sports brands—which include the Muhammad Ali estate, Shaquille O’Neal, Julius Irving and Greg Norman as well as Prince, Spyder, Tapout, Airwalk, Volcom, Hind and Above the Rim—could produce some interesting collaborations in content, marketing, sponsorships and licensed products. Conversely, from a media viewpoint, it’s uncertain how ABG would approach the future of Sports Illustrated, one of iconic names in sports known for its in-depth news coverage; longform features and video; the annual SI Swimsuit issue; its Sportsperson of the Year award; and other special rankings including the Fashionable 50, which highlights the world’s most stylish athletes in all sports.
According to several published reports, the ABG bid is $110 million, which is far less that the $150 million Sports Illustrated parent Meredith hoped it would get following the acquisition of Time Inc. last year. ABG is backed by Leonard Green & Partners, General Atlantic and Lion Capital. Other suitors include former NBA/Milwaukee Bucks player and entrepreneur Ulysses “Junior” Bridgeman and private equity firm TPG Capital.
Target Introduces ‘Green’ Brand
In conjunction with the celebration of the annual Earth Day, Target unveiled a new line of environmentally friendly household products. The “Everspring” brand consists of 70 products developed by Target’s design team that include laundry detergent, paper towels, hand and face wipes, and multi-purpose cleaner.
This new brand not only reflects Target’s strategic inititiave, which it began two years ago, to revamp its merchandise offerings, but it also shows the retailer’s commitment to products that use renewable and recycled ingredients.
Target has already introduced about 20 exclusive brands across various categories and more are being developed.
According to Target, the products include ingredients and components that are derived from plants or use other renewable materials, as well as post-consumer recycled paper.
“Everspring is a great example of how we’re listening—and responding—to the evolving needs of our guests in a way that’s uniquely Target,” said Christina Hennington, senior vice president, general merchandise manager. “Guests can feel confident they’re purchasing essentials for their home that include ingredients and components they want and have the efficacy they need to get daily routines done. And, at prices nearly 20% less than comparable brands and a focus on fresh design, Everspring offers guests another compelling reason to stock up at Target.”
Hasbro Reports Q1 Improves vs. 2018
Hasbro reported financial results for the first quarter 2019 showing improvement over the same period last year and perhaps an indication that the post-TRU malaise is having less influence on overall performance. Q1 highlights include:
- Net revenues increased 2% to$732.5 millioncompared to $716.3 million in 2018.
- Net earnings were$26.7 million versus a net loss for the Q1 2018 of$112.5 million.
- Franchise Brands revenue increased 9%; Hasbro Gaming up 2%; Emerging Brands up 22%; and Partner Brand revenues declined 14%.
- Entertainment, Licensing and Digital segment net revenues increased 24% to $92 millioncompared to $74.4 millionin 2018. Revenue growth was driven by Magic: The Gathering Arena and consumer products licensing revenue.
“The global Hasbro team is executing very well and delivered a good start to the year,” said Brian Goldner, Hasbro’s chairman and chief executive officer. “Our long-term investments in new platforms provided a meaningful contribution from our digital and e-sports initiative, Magic: The Gathering Arena, as well as growth in MAGIC: THE GATHERING tabletop revenues. In addition, Monopoly, Play-Doh and Transformers were among the brands posting revenue gains this quarter. We are beginning to see improvement in our commercial markets, notably in the U.S. and Europe, and operating profit was driven by high margin revenue growth and our cost savings activities. With most of the year ahead of us, we remain on track to deliver profitable growth for the full-year 2019.”
“In addition to executing on the top-line, our team remains focused on implementing the cost savings initiatives we announced last year,” said Deborah Thomas, Hasbro’s chief financial officer. “We continue to expect full-year net cost savings of $50-$55 million, as we announced in February. Our balance sheet is strong, and we continue investing in areas intended to drive long-term profitable growth.”
Mattel Reports Q1 with Positive Spin
Mattel’s Q1 results show a decline in revenue and a loss slightly less than Q1 2018. The company is still immersed in its turnaround efforts that are driven by its commitment to entertainment and taking its core franchises to the big screen. Q1 highlights include:
- Net sales were down 3% to $689 million.
- Operating loss was $131 million versus $145.6 million in 2018.
Ynon Kreiz, chairman and CEO, Mattel said: “This was another strong quarter, demonstrating meaningful progress in the execution of our strategy, a significant improvement in profitability and a solid performance in our topline. The positive momentum exiting 2018 has continued and is reflected in our operating results. While we are in a multi-year turnaround, we remain on-track to achieve our goals to restore profitability and regain topline growth in the short-to-mid-term and capture the full value from our IP in the mid-to-long term. I continue to be inspired by the commitment and capabilities of our organization as we build shareholder value and transform Mattel into an IP-driven, high-performing toy company.”
Joseph Euteneuer, CFO, Mattel said: “This represents the third consecutive quarter of improvement in our key profitability metrics, including Gross Margin, Operating Income, EBITDA and EPS. We have achieved $610 million of run-rate savings from our Structural Simplification program and expect to exceed our goal of $650 million exiting 2019. We have begun implementing our Capital Light model and look forward to starting to realize additional savings in 2020.”
Tom Brady Remains No. 1 in Merch Sales
New England Patriots quarterback Tom Brady topped the list of NFL players licensed merchandise sales, according to the National Football League Players Association. This was the third time Brady was No. 1 in total sales of player merchandise for the period March 1, 2018 through February 28, 2019.
The NFLPA Top 50 Player Sales List is based on verified data reported by over 70 NFLPA licensees including Fanatics, Outerstuff, Nike, Fathead, FOCO, Wincraft and Funko. Licensed product categories include video games, trading cards, men’s, women’s and youth game jerseys, T-shirts and hoodies, backpacks, wall decals, pennants, collectible figurines, matted and framed photos, bobbleheads, plush, drinkware, and pet products. For the fifth consecutive year, NFLPA licensees generated record retail sales, exceeding $1.6 billion during the year.
Top 10 players of all officially licensed products sold are:
- Tom Brady, QB, New England Patriots
- Dak Prescott, QB, Dallas Cowboys
- Carson Wentz, QB, Philadelphia Eagles
- Ezekiel Elliott, RB, Dallas Cowboys
- Patrick Mahomes II, QB, Kansas City Chiefs
- Saquon Barkley, RB, New York Giants
- Aaron Rodgers, QB, Green Bay Packers
- Deshaun Watson, QB, Houston Texans
- Khalil Mack, LB, Chicago Bears
- Drew Brees, QB, New Orleans Saints
Key sales highlights include:
- Dallas Cowboys quarterbackDak Prescottfinished No. 2 for a third straight year and was joined by teammate Ezekiel Elliott at No. 4. The duo has occupied two of the top four spots on the last eight Top 50 Player Lists.
- Kansas City Chiefs quarterback Patrick Mahomes jumped to No. 5 following a record-breaking season.
- The rookie class registered strong player retail sales: New York Giants Saquon Barkley at No. 6, Cleveland Browns Baker Mayfield (No. 12), New York Jets Sam Darnold (No. 26), Leighton Vander Esch (No. 31) and Buffalo Bills Josh Allen (No. 48).
- On the defensive side, seven players made the year-end list, including Chicago Bears linebacker Khalil Mackat #9, matching the record set by Houston Texans defensive end J.J. Watt(2015-16) for highest-ranked defensive player.
- Fathead wall decals and cutouts of Tom Brady, Saquon Barkley, Odell Beckham Jr., Baker Mayfield and Patrick Mahomes were best sellers.
- Tom Brady, Rob Gronkowskiand Baker Mayfieldwere top sellers of Funko Pop vinyl collectibles.
- Tom Brady, Drew Breesand Patrick Mahomes dominated sock sales from Freaker.
- Julian Edelman and Sam Darnold were best sellers of drinkware from Boelter Brands.
- Todd Gurley, Von Miller and Jimmy Garoppolo sold the most products from Aminco, including fashion jewelry, hair accessories, key rings, magnets, pendants and pins.
Store Brands Outpace Growth of National Brands
Private label brands, according to the latest Nielsen data, reveals that dollar volume in the mass retail channel surged 41% over the last five years, compared to a gain of only 7.4% for national brands.
The growth lead is even more pronounced when it comes to units. The Nielsen data shows that store brands volume increased 33.2%, while the national brands increased by less than 1%. Private label brands will continue to grow at retail and across all merchandise categories putting competitive pressure on popular national brands as well as licensed brands. This has been clearly evident among major retailers including Walmart, Target and Amazon who have all introduced dozens of private brands over the past year.
In 2018, private label dollar sales advanced 9.8% and unit volume gained 10.6%, according to Nielsen, while national brands were flat in dollar volume and declined 1.3% in units.
According to the Nielsen report, over the past five years dollar volume for the mass channel has climbed 12.6%, while unit volume increased 6.4%. Total sales in the mass channel reached $314 billion vs. $330 billion in supermarkets.
Article of the Week: Game of Thrones
As I have previously reported, despite Disney’s incredible 2019 list of franchise films and licensed merchandise collections, there is room at retail for other popular franchises. For example, HBO’s Game of Thrones has proven to be one of those franchises over the past several years and the buzz over its final season has been phenomenal. And there’s been extensive licensed merchandise across all categories at retail. Check out the following AP article: ‘Thrones’ is ending, but will live on in merchandise.
Another Article Worth Reading: MGA’s Larian
Check out this New York Post article about Isaac Larian, CEO, MGA Entertainment.
Stat of the Week: Marvel
Avengers: Endgame generated $350 million domestically over its first three days and a record $1.2 billion at the global box office in just its first five days in release. Will it end up being the largest grossing movie of all time, beating Avatar’s $2.8 billion?