ABG: Growth is a Slam Dunk

With nine acquisitions over the past two years, ABG is expanding rapidly internationally, and now has 27 brands in its portfolio across celebrity and entertainment, fashion and sports.

From the long corridor that features a wall of its brands at Authentic Brands Group's new headquarters in the heart of New York's fashion district to the individual showrooms that showcase each of its brands, it's evident that ABG has come a long way since it was formed just seven years ago with a $250 million funding commitment.

The privately held brand management company, founded by entrepreneur Jamie Salter in conjunction with private equity firm Leonard Green & Partners, has more than doubled its retail sales of licensed products worldwide to $5 billion over the past several years. And ABG could double in size again over the next few years, according to chairman and chief executive officer Salter, who still remains sharply focused on acquisitions and growing the company's existing portfolio around the globe. This commitment to growth means that ABG could hit $10 billion in retail sales of licensed merchandise and jump from No. 13 on the Top 150 Global Licensors report, published annually by License Global, to No. 5, behind only Disney Consumer Products Interactive, Meredith, PVH and Iconix, respectively.

The strategy behind ABG's growth record and success has remained simple and consistent in its relatively short but impressive history, with a clear effort to solidify its organizational structure, personnel and business models, enhance content creation and social media efforts and improve its retail partnerships. The company continues to effectively transition from start-up mode to a well-organized brand management machine that could possibly pursue an IPO in the future, if media reports from December prove true.

ABG has strengthened its operational structure to include three specific business pillars–celebrity/entertainment, fashion and sports–with key management personnel in place that are focused on each individual business and brand.

"The board came to us and said: 'We love what you are doing and the way you have disrupted the business, but you are doing too much,'" explains Nick Woodhouse, president and chief marketing officer, ABG, who joined Salter in 2012 and spearheaded the company's expansion. "The board advised us to strengthen the management team."

As a result, ABG established a new level of management below Salter, Woodhouse and Kevin Clarke, chief financial officer, and the company continues to strengthen its levels of executives and middle managers as well. With more than 130 employees, ABG remains in hiring mode, particularly as new brands and initiatives continue to be introduced. The company is placing boots on the ground in key international markets in China, Mexico, Latin America and Europe, and is also adding more experienced managers and field representatives to nurture its retail and licensee partnerships.

"We work more directly with our partners and retailers to drive growth of the business," says Woodhouse. "We have hired people with retail experience and direct-to-consumer business experience, so when we talk to Macy's, for example, we can better understand what all the reports mean and improve the sell-through."

ABG has grown from its first brand, Tapout, to a robust portfolio of 27 brands that give the licensor a major position in celebrity and entertainment such as living legends described as "game changers" including Shaquille O'Neal, Julius "Dr. J" Erving, Thalia and Greg Norman. The company has also solidified a major position at retail following its acquisition of Aéropostale in October 2016, which continues to be available in more than 800 doors worldwide.

Salter takes pride in the fact that ABG does things a little differently than other brand management companies and licensors, but at the same time he strives to take a similar approach to Disney.

"Disney is always enhancing their brands through content, and they continue to reinvest in their brands over time," says Salter. "If you don't do all of the above, you will be left with brands that sail off to sea and don't necessarily come back to the mainland. Growth for us is not just about growing in profitability, but about having a good, long-term business plan and creating brand value."

Each brand in the ABG portfolio is not only at a different stage of development, but also leverages various aspects of its IP in different ways, ranging from more traditional product licensing deals to various types of endorsements and promotions, brand ambassadorships and popular collaborations.

Consider the following examples:

Content on the whole is another key initiative for ABG, and to support its efforts, the company recently formed a new department under the direction of Natasha Fishman, executive vice president, marketing, that focuses on all aspects of content creation.

"We are becoming a full content machine with music, movies, television shows–the sky's the limit," says Woodhouse. "We believe content is the biggest driver in brand development."

With more than 220 million followers across all of its brands, ABG is committed to connecting with its consumers and positioning its brands appropriately.

"ABG uses social media to promote its news and initiatives and as a platform to share key content," says Woodhouse. "Everything you do today is content–from the movies that we are developing about Elvis to behind the scenes at a campaign shoot, a visit to ABG headquarters from one of our celebrity partners or brand ambassadors. Each of these moments captured adds to the brand narrative."

For example, ABG manages and operates the social media platforms for the Elvis Presley brand. Since its launch in 2011, the brand has grown to more than 14 million followers worldwide across Facebook, Instagram and Twitter.

When it comes to acquisitions, the brand attributes that Salter looks for include emotion, a No. 1 or 2 position in their respective category and having a lifestyle, legacy and equity that is already part of the brand's DNA.

"If we don't see significant growth in a brand, we will not buy it. It's all about growth, and if you can't double that growth in a short period of time, you shouldn't buy it," emphasizes Salter. "It takes 18 months to put the proper procedures and accountability in place to build the brand–there's no need to rush. For example, we just bought Frye, which has only one licensee. We are looking at how to strategically expand the brand via new and relatable categories as well as growth in key territories where Frye resonates."

ABG's global licensee network has grown to 604 licensing partners, up from 470 in 2015.

ABG is also fully committed to growing its international business, which now accounts for almost 50 percent of its total retail sales of licensed merchandise.

Salter believes that future deals will be bigger and that there is a lot of growth potential on the celebrity and entertainment side, while in fashion and sports, ABG will continue to be very selective.

While Salter has always been a big thinker and an ambitious executive, he has been able to deliver impressive results since the formation of ABG. With a low-leveraged debt position, a strong cash position, a well diversified portfolio, along with a strong organizational structure and retail presence worldwide, Salter remains bullish about the future, projecting that ABG can double its business in three to five years to $10 billion in retail sales.