The highlights of the deals that made headlines during Licensing Week; Barnes & Noble Acquired by U.K. firm; GameStop reports double digit sales decline; REP will handle MLS players; Barbie Greets Hello Kitty; Hasbro licenses Tonka; Licensing International reports sales data; 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 retailers, licensors and brands.
Barnes & Noble is Acquired by U.K. Firm
After a long period of speculation about its future, Barnes & Noble has announced that Elliott Advisors Limited will acquire it in an all-cash transaction valued at $683 million.
The Barnes & Noble deal follows Elliott’s June 2018 acquisition of Waterstones, the largest retail bookseller in the U.K. James Daunt, CEO of Waterstones, will assume also the role of CEO of Barnes & Noble following the completion of the transaction and will be based in New York. The transaction is expected to close in the third quarter of 2019.
Barnes & Noble has been in a strategic review and this deal makes sense for the challenged book retailer. It’s unlikely that the deal will have a dramatic impact on the company’s limited, but strong licensing business that is focused on major publishing and entertainment properties. The other good news is that major store closings are unlikely at this point.
According to the company, the $6.50 per share purchase price represents a 43% premium to the 10-day volume weighted average closing share price of Barnes & Noble’s common stock ended June 5, 2019, the day before rumors of a potential transaction were reported in the media. The transaction is the culmination of an extensive Strategic Alternative Review conducted by the Special Committee of the Barnes & Noble Board of Directors, which was announced on October 3, 2018.
Barnes & Noble, the largest retail bookseller in the U.S., operates 627 stores in different communities across all 50 states.
The company stated, “Elliott seeks to build upon this strong foundation as it addresses the significant challenges facing the bricks and mortar book retail space, applying a model that successfully turned around Waterstones over the past decade. Waterstones has successfully restored itself to sales growth and sustainable profitability, based on a strategy of investment in their store estate and the empowerment of local bookselling teams. Under Daunt’s leadership and Elliott’s stewardship, this commitment to bookselling excellence will strengthen the ability of both companies to navigate with success a rapidly changing retail landscape.”
Leonard Riggio, founder and chairman of Barnes & Noble, stated, “We are pleased to have reached this agreement with Elliott, the owner of Waterstones, a bookseller I have admired over the years. In view of the success they have had in the bookselling marketplace, I believe they are uniquely suited to improve and grow our company for many years ahead. I am also confident that James Daunt has the leadership ability and experience necessary to lead this great organization. I will do everything I can to help him make the transition smooth. Having been the leader of Barnes & Noble for 54 years, I have had the privilege of working with the very best people in all the world of bookselling, including our great store managers and booksellers, who work in our stores. It is they who have made Barnes & Noble the #1 most reputable retailer in America. My profound thanks, as well, to the entire publishing world, with whom we have shared a great relationship over the years, and the many suppliers who have provided vital services. Finally, to our tens of millions of wonderful customers and Members, it has been a privilege to serve them.”
In anticipation of his new CEO role at Barnes & Noble, Daunt added, “I look forward greatly to working with the booksellers at Barnes & Noble. Physical bookstores the world over face fearsome challenges from online and digital. We meet these with investment and with all the more confidence for being able to draw on the unrivalled bookselling skills of these two great companies. As a place in which to choose a book, and for the sheer pleasure of visiting, we know that a good bookstore has no equal. I thank Riggio for his confidence, and I am grateful to Elliott for their commitment to support the continued transformation at Waterstones, and now also the same at Barnes & Noble.”
GameStop Reports Q1 Sales Decline
With continued concern over GameStop’s turnaround strategy, the company’s Q1 results failed to reassure observers. Total global sales decreased 13.3% to $1.5 billion, resulting in a consolidated comparable store sales decrease of 10.2% in the U.S. and 10.4% internationally. GameStop’s Q1 net income was $6.8 million compared to $28.2 million last year.
The only good news here is that the retailer’s collectables business continued to grow, a key strategy to its overall turnaround. The one observation is that no matter how strong the merch business becomes; will it be enough to offset other category sales declines. It’s not looking like a strong year for the popular retailer.
George Sherman, GameStop’s chief executive officer said, “Since joining GameStop in April, I have been undertaking a thorough review of the business and working closely with the team to improve our operational and financial performance, address the challenges that have impacted our results, and execute both deliberately and with urgency. We believe we will transform the business and shape the strategy for the GameStop of the future. This will be driven by our go-forward leadership team that is now in place, a multi-year transformation effort underway, a commitment to focusing on the core elements of our business that are meaningful to our future, and a disciplined approach to capital allocation.”
Q1 business highlights include:
- New hardware sales decreased 35.0%, with an increase in Nintendo Switch sales more than offset by a decline in Xbox One and PlayStation 4 console sales.
- New software sales decreased 4.3%, driven by weaker new title launches in the quarter compared to last year.
- Accessories sales increased 0.6% on the continued strength of controller sales.
- Pre-owned sales declined 20.3% reflecting declines in hardware and software.
- Digital receipts decreased 6.7% to $255.4 million, driven by weaker title launches in the quarter compared to last year.
- Collectibles sales increased 10.5% to $157.3 million, with continued growth in both domestic and international stores.
Dan DeMatteo, GameStop’s executive chairman said, “With our operating profit improvement initiative well underway, we are focused on executing on the significant opportunities available to us to transform GameStop for the future. The board is confident that redirecting capital towards debt reduction and transformation initiatives will create additional shareholder value over the long- term.”
GameStop’s full year company guidance is as follows:
- FY 2019 Total Sales (from continuing operations): -5% to -10%
- FY 2019 Comparable Store Sales: -5% to -10%
Top Deals of Licensing Week
There were numerous partnerships announced this week across major categories that reflect the key trends driving the licensing business. Here’s a rundown by trend and by top licensor:
VNCP Reboots Blues Clues
Viacom Nickelodeon Consumer Products announced the first licensees for its Blue’s Clues & You!, curriculum-driven interactive series.
- Just Play will be the global preschool toy partner for plush, figures, playsets and role play;
- Vtech will handle early learning toys;
- Cardinal will manage games and puzzles.
“Blue’s Clues & You! is quickly building buzz and excitement, and we are so proud to reintroduce this iconic show to a new generation of kids, and also to terrific licensing partners who can bring these beloved characters to life through product,” said Jennifer Caveza, senior vice president, Toys, Viacom Nickelodeon Consumer Products. “Blue’s Clues was Nickelodeon’s first ever billion-dollar consumer products brand, and there’s already a ton of excitement with retailers for this dynamic new take on the franchise.”
Blue’s Clues & You! will feature a new host, Joshua Dela Cruz, and a refreshed signature look. Three episodes of the series will debut on Walmart’s video service, Vudu, prior to its launch on Nickelodeon in November. The original Blue’s Clues series launched in September 1996.
Mattel and Sanrio Sign Major Deal
Former Sanrio president Janet Hsu is reunited with the Hello Kitty franchise as Mattel and Sanrio have announced a major new partnership that gives the toy company exclusive rights for Hello Kitty portfolio. Mattel will design and develop a wide array of toys, dolls, playsets, games, puzzles, baby gear, plush, vehicles and other products inspired by Hello Kitty & Friends and Hello Kitty Cafe, as well as other characters including Hello Kitty, Keroppi, Chococat, Badtz-Maru, Little Twin Stars, Tuxedosam, Pompompurin, My Melody, Hangyodon, and Pochacco.
The toy lines and games will available in North America, Europe, Latin America, Australia and New Zealand beginning Fall 2020.
“We’re excited to bring the Supercute world of Sanrio to life through toys that will allow for fans of all ages to experience Hello Kitty and Sanrio Friends in new ways,” said Janet Hsu, chief franchise management officer of Mattel. “This relationship is another example of Mattel’s commitment to collaborate with globally-recognized franchises as part of our transformation into an IP-driven, high-performing toy company.”
“Mattel is the perfect partner to align with our mission to evolve the brand and connect with Sanrio fans worldwide,” said Craig Takiguchi, COO of Sanrio. “Their global reach and creative approach to product development and storytelling is like no other. I am confident that together we will transform our toy business in a unique way that will resonate with generations of Sanrio fans.”
Mattel Plans Another Franchise Film
As part of its overall turnaround strategy and commitment to content, Mattel has partnered with Blumhouse Productions to create a live-action feature film based on the iconic, fortune-telling Magic 8 Ball brand. Jeff Wadlow, whose previous work includes notable films such as Kick-Ass 2 and Truth or Dare, will direct the film. Wadlow is writing the script with his collaborators, Jillian Jacobs and Chris Roach.
This marks Mattel Film’s first partnership with independent Blumhouse Productions, and marks the sixth project Mattel Films has in development, including films based on Barbie, Hot Wheels, Masters of the Universe, American Girl and View Master brands.
“Since the 1950s, Magic 8 Ball has inspired imagination, suspense and intrigue across generations. This iconic toy has a built-in connection with fans and untapped potential for storytelling,” said Robbie Brenner, Mattel Films. “There are no partners better suited to tell the Magic 8 Ball story in collaboration with Mattel Films than Jeff Wadlow and Blumhouse Productions, whose unique approach to the thriller genre has captivated audiences worldwide and has gained widespread accolades.”
“As fans of Mattel and their iconic brands, we’re looking forward to bringing Magic 8 Ball, one of their most celebrated toys, to life, and playing against expectations in doing so,” said Jason Blum, founder of Blumhouse Productions. “We look forward to partnering with Mattel Films to put this project on the fast track to the big screen and create a memorable experience for moviegoers.”
In the last decade, Blumhouse has released well-known franchises such as Happy Death Day, The Purge, Insidious, Ouija and Paranormal Activity, as well as the Academy Award-nominated films Whiplash, Get Out and BlacKkKlansman.
Basic Fun! Secures Rights to Tonka
Toy and novelties company Basic Fun! has partnered with Hasbro to license the Tonka brand. The multi-year deal would expand the licensing relationship between the two companies, which already includes Pound Puppies, Lite-Brite, Lincoln Logs, Tinker Toy, My Little Pony Classic, Koosh, and Weebles, among others. Basic Fun’s new line of Tonka trucks is expected to launch at retail in Fall 2020 and will feature the classic steel Tonka Trucks, die-cast range, and traditional plastic lights and sounds products.
“Today’s kids are at risk of forgetting how to play with anything but a smart phone, which is why we are so thrilled to be taking on the iconic Tonka toy line that is all about going outside to play and encouraging kids to use their imaginations,” said Jay Foreman, CEO of Basic Fun! “Tonka has always been known for the biggest and best quality tough trucks and toy vehicles in the market, and we plan to make sure consumers know Tonka is the ‘go to’ brand in this category.”
“We are excited about bringing one of our jewels to a trusted partner like Basic Fun!,” said Casey Collins, general manager and senior vice president, Entertainment and Licensing, Hasbro. “For years, the company has become an important collaborator of ours, effectively managing many of our classic vault brands. Tonka is perhaps the biggest of them all, and we know the program is in great hands with the Basic Fun! team and their vision to reimagine the brand for today’s kids.”
Hasbro Signs Deal for Micro Machines
Hasbro has named Wicked Cool Toys Global Master Toy Licensee for Micro Machines, a popular toy brand in the 1980s and ‘90s. The new line of Micro Machines is expected to hit store shelves in the fall of 2020.
Michael Rinzler, co-president of Wicked Cool Toys, said, “Micro Machines is one of those amazing nostalgic brands that still has appeal 30 years later. There is huge potential to bring it back.” Jeremy Padawer, co-president, continued, “Considering recent toy unboxing trends, the brand’s multigenerational appeal, and the vehicle category’s ripeness for something ‘new’ again, we believe Micro Machines will be a global phenomenon.”
The original Micro Machines line was made by Galoob, which is now part of Hasbro. Casey Collins, General Manager and Senior Vice President of Entertainment and Licensing at Hasbro said, “We are thrilled to be partnering with Wicked Cool Toys, an entrepreneurial toy company that has a proven track record in relaunching classic brands with product innovation and a modern, sophisticated marketing approach. We are excited to collaborate to introduce Micro Machines to a whole new generation of kids.”
Jazwares Partners with New Sony Film
Jazwares has partnered with Sony Pictures Consumer Products as the master toy licensee for Vivo, the new animated musical movie featuring 11 songs written by Hamilton‘s Lin-Manuel Miranda. Vivo is set to debut in U.S. theaters on November 6, 2020.
“We couldn’t imagine a better fit for Vivo than Jazwares. Their love for music and ability to create great products will allow fans to bring the magic of Vivo home,” said Jamie Stevens, executive vice president, Sony Pictures Consumer Products.
Jazwares’ toy line will hit shelves in Fall 2020 featuring figures, playsets, plush, and a line of First Act musical instruments.
“Finding a property as committed to the importance of music in a child’s life as we are is a special, connected experience for us. Our line will bring to life Vivo‘s journey from Havana to sunny South Florida! Consumers can look forward to products that bring lush settings and vibrant characters to life incorporating music every step of the way,” says Laura Zebersky, chief commercial officer at Jazwares.
Cloudco Plans Retail Entertainment
Falcon’s Creative Group and Cloudco Entertainment will create retail entertainment experiences based on the popular Care Bears brand.
“We’re excited to team up with Falcon’s Creative Group to create new ways to engage with the Care Bears franchise, said Robert Prinzo, head of global licensing, Cloudco Entertainment. “We have experienced great synergy with Falcon’s and look forward to bringing the Care Bears and Care-A-Lot to life with their team.”
“We are incredibly honored to be working alongside Cloudco Entertainment to expand the universe of such a timeless brand,” said Cecil D. Magpuri, president/chief creative officer of Falcon’s Creative Group. “These future retailtainment venues will incorporate an exciting blend of technology and the colorful theming the Care Bears brand is known for, creating a one-of-a-kind guest experience.
REP Will Handle MLS Players
The Major League Soccer Players Association and REP Worldwide announced an agreement in which REP Worldwide will serve as the exclusive partner and strategic advisor for MLS players’ group licensing rights.
The MLSPA is the union that represents all current players in Major League Soccer (MLS). Those players have assigned to the MLSPA the right to license the players’ group licensing rights (including a group of players’ names, images, likenesses and other player-owned intellectual property) to third-party manufacturers and service providers. Under the new agreement, REP Worldwide will provide extensive resources and expert representation to MLS players and the MLSPA to grow robust and sustainable group licensing and player marketing programs designed to maximize the value of players’ group licensing rights.
“As players, we know the importance of making the most of our opportunities both on and off the field,” said Toronto FC Forward Jozy Altidore. “Our partnership with REP Worldwide will allow us to broaden our reach, develop new commercial relationships and take more ownership in building our individual and collective brand.”
Launched in 2017 by the NFL Players Association’s licensing and marketing arm, NFL Players Inc., the U.S. Women’s National Team Players Association and the Women’s National Basketball Players Association, REP Worldwide (Representing Every Player) is a first-of-its-kind group licensing representation business.
As part of the agreement, REP Worldwide will structure and manage MLSPA licensing partnerships across categories including digital, apparel, hardlines and experiential.
“This agreement signifies an important turning point in the licensing and marketing of commercial opportunities for all MLS players,” said Bob Foose, executive director of the MLSPA. “The REP Worldwide team brings invaluable experience, knowledge, and relationships for us to build upon. We’re very excited to get to work.”
“We are excited for MLS Players as they chart a new course of growth for their group licensing program and thank them for placing their trust in REP Worldwide,” said Steve Scebelo, president of REP Worldwide. “These world-class players are driving the popularity of the game in North America, and they can now take a greater part in this success through a thriving and extended licensed merchandise program.”
MLSPA members join REP Worldwide alongside the U.S. Women’s National Team Players Association, the Women’s National Basketball Players Association and the U.S. Rugby Players Association.
IMG to Rep Bundesliga
IMG has signed a multi-year agreement to become the exclusive global licensing agency for Bundesliga, a subsidiary of the DFL association.
Sven Thierhoff, Vice President of Licensing, IMG, says: “We are pleased to represent one of the best football leagues in the world. The Bundesliga has growing global appeal, which makes this an exciting challenge for us as we look to tap into a passionate and international audience.”
Expect this licensing program to be similar to other sports teams including apparel, accessories and typical souvenirs.
Beanstalk to Rep Cannabis Company
PRØHBTD, a global hybrid consumer goods and content company in the cannabis and hemp industry, announced an exclusive agreement with Beanstalk to expand hemp licensing around the world, with future plans to also include CBD and cannabis. This agreement extends beyond representation, as Beanstalk will also be able to access PRØHBTD’s deep industry expertise and market knowledge to help its clients gain a better understanding of the cannabis and hemp landscape. PRØHBTD will provide Blueprint, Beanstalk’s consulting division, with valuable information and consulting around consumer insights, products, manufacturing, and other services to help guide Beanstalk clients that may be seeking to extend their brands into this rapidly evolving space.
“In North America, we are in the branded products phase of our industry and building global brands will require sophisticated and creative licensing programs. The Beanstalk team are incredible world class partners with a history of success that is second to none. We’re honored to be working together to not only bring our brands to life around the world but also to help educate their clients and help them succeed in our complex industry,” says Drake Sutton-Shearer, CEO of PRØHBTD.
The partnership will initially focus on two PRØHBTD brands: Hempathy, a hemp-based cosmeceutical line, and Ceeby Dee’s, a hemp-derived lifestyle dietary supplement.
Beanstalk will seek licensee and retail partners to extend both brands into lifestyle categories including health and beauty, food and beverage, apparel and accessories, and home décor.
Global Sales of Licensed Products Hit $280 Billion
Global retail sales of licensed merchandise and services grew to $280.3 billion in 2018, a 3.2 percent increase over the $271.6 billion generated in 2017, according to the 5th Annual Global Licensing Survey, released by Licensing International and Brandar Consulting.
The U.S. and Canada accounted for 58% of licensed goods and services with $162.6 billion (up 3.1% from the prior year). Latin America, Northern Asia and Southern Asia/Pacific markets experienced the strongest year-over-year increases in licensing business, each showing growth of more than 5% for the year.
The entertainment/character sector was the largest category, accounting for $122.7 billion, or 43.8% of the total global licensing market. The second-largest sector was corporate brands with $58.8 billion (21%) of the overall business. Fashion was the next largest ($32.2 billion, 11.5%), followed by sports ($27.8 billion, 9.9%).