$10-Bln Valuation
Read management/analysts’ comments on quarterly reports
The New York-based firm, whose main business involves developing and marketing lifestyle brands, has scooped up many struggling brands like Brooks Brothers and Nine West — which were on the brink of bankruptcy at one point in time – and revived them. Besides Merlyn Monroe, it also owns the brand names and rights to yesteryear celebrities Elvis Presley and Muhammad Ali.
In Expansion Mode
The brand licensing giant has broadened its portfolio consistently since 2010 when it was founded by Jamie Salter, and currently owns around 30 apparel brands that include celebrity wear and sportswear. Salter has served as the CEO since then. Its major stakeholders include BlackRock Inc. (BLK: NYSE), General Atlantic LLC, and Leonard Green & Partners LP.
Continuing the expansion spree, Authentic acquired Washington-based clothing store chain Eddie Bauer a few weeks ago, together with SPARC that co-owns around 1,500 stores in a joint venture with the company.
Risks
On the flip side, the mass shift to online shopping might not bode well for some of the brands managed by the company, due to their brick-and-mortar-focused business model. Also, any potential impact on cash flow would undermine its ability to deal with the $1.8-billion debt, which is comprised of two term loans. Going by the aggressive growth strategy — endorsed by the management claiming it is “just getting started” –debt will grow further going forward.
Here’s what to know about the Membership Collective Group IPO
Being a brand manager with little control over store operations, inventory, and supply chains makes the business more vulnerable to macroeconomic headwinds than the manufacturers and retailers of those brands. That means the reputation and financial condition of its partners and the quality of products can influence the company’s operations at any time. However, the unique business model allows it to reduce overhead costs and avoid investing in high-value assets.
Financial Data
In fiscal 2020, total revenues increased 2% annually to $488.9 million. Reflecting the positive top-line performance and moderation in expenses, net profit nearly tripled to $211 million. Authentic recorded around $10 billion of gross merchandise value from sales of branded products, through its 700-odd operating partners spread across the globe.