Barney’s savior Authentic Brands has about $ 1 billion to buy more troubled retailers

Jamie Salter, President and Chief Executive of Authentic Brand Group LLC.

Norm Bates | Bloomberg Getty Images

He helped save Barney from liquidation last year and saved retailers Brooks Brothers and denim apparel manufacturer Lucky Brand from bankruptcy this month – just a warm-up for Jamie Salter.

“I was the first in the first innings,” said Salter, a 57-year-old chief executive of apparel licensing firm Authentic Brands Group.

Salter may not be a household name, but it may be the best chance to save the industry’s best-loved brands from joining Woolworth and Blockbuster. Even before the coronovirus epidemic hit, many retail people were already sitting on the edge of solvency, with 44 retail bankruptcies and more than 6,000 store closures already announced this year.

This creates opportunities for a company like the Authentic Brand Group, which was making $ 15 billion in annual retail revenue before the Kovid-19, which originated from Wuhan, China, eight months ago. He said he recently received a fresh capital infusion of $ 600 million from backers Blackrock, General Atlantic and Leonard Green & Partners for more deals. So Selter is now sitting on a lot of cash and is on the hunt for deals.

“We have more than $ 1 billion in dry powder … and I didn’t take advantage of the company,” he said in an interview on Friday.

Simon Property Group, owner of Authentic Brands and the country’s largest mall, has formed a joint venture called Spark, which is paying $ 140.1 million for the Lucky brand, revamping its store and website. Spark’s $ 325 million bid to save Brooke Brothers from bankruptcy and at least 125 stores was just approved and is expected to close later this month.

“People are asking me, ‘Jamie. Mall-based retail? I don’t get,” Salter said. “What I’m going to say to you, we need bricks and mortar. Retail really needs it.”

For an industry that was already struggling to compete with Amazon, the coronovirus epidemic has now pushed thousands of retailers to the edge, with thousands growing permanent store closures. And the upheaval is not expected to slow down any time soon.

However, Selter is not just looking to buy anything. He said that he is looking for crippling businesses with good real estate and international recognition.

“Brands that do not have stores are difficult to expand in the market and globally,” he said. “You need a footprint and a supply chain. Those are two important parts to running a business.”

Authentic brands have a history of saving hobby retailers. Brands under its umbrella include Barneys New York, Forever 21, Aeropostale, Nautica and Nine West – multiple stores in a typical suburban shopping mall. It made its first deal with Simon in 2016 when it bought Aeropostale out of bankruptcy for $ 243.3 million. A few years later, it paid $ 81 million for the teen retailer Forever 21 with Simon Property and Brookfield.

“The mall is still important for creating brand value on a global basis,” Salter said.

Spark CEO Mark Miller said Spark gained momentum after the aeropostale deal.

“We see ourselves becoming the world’s leading brand operator,” said Miller, who was the chief executive officer at Aeropostale.

“At a time when retail is under incredible pressure, we have the opportunity to leverage a fixed cost base,” he said, pointing out that Spark has been able to spread spending across its many brands. “There are massive advantages … Sourcing power. You get those kinds of economics.”

And while Simon Properties specializes in retail real estate and bargains leases, the Authentic Brand Group brings its extensive background in licensing and construction, he said.

Shoppers should expect some changes to their beloved brands that have been acquired by Spark. Miller and Salter have plans to combine Lucky and Brooks Brothers’ items, which will later expand into selling men’s grooming products.

“You want diversity, diversity, diversity,” Salter said. “That’s why category expansion is so important when you’re buying these brands.”


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