Hilco Consumer Capital, a division of financial services and liquidator The Hilco Group, has established a viable business model—already proven successful by other top licensors—based on the acquisition of venerab

April 6, 2018

5 Min Read

Hilco Consumer Capital, a division of financial services and liquidator The Hilco Group, has established a viable business model—already proven successful by other top licensors—based on the acquisition of venerable consumer product companies and retailers, when oftentimes the only remaining asset is the value of their name. i1_594.jpg

In the past two and a half years since the company was founded, the Toronto-based private equity firm has acquired 10 well-known brand names, establishing a pure licensing company with virtually no assets or inventory except brand equity, management, marketing and Internet expertise.

The goal, according to HCC president and chief executive officer Jamie Salter, is to "be the global leader in managing, growing and owning a highly diversified portfolio of sustainable consumer brands."

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The HCC business model, says Salter, who has more than 25 years in consumer products and brands background and has completed more than $2 billion of brand-related investments, is to build a highly diverse platform with five distinct brand segments: consumer electronics, sporting goods, home, fashion and iconic personalities.

This model, he explains, differs from key competitors such as Iconix Brand (ranked No. 2 on License! Global's Top 100 Licensors list with $6.5 billion in retail sales), which focuses primarily on apparel and home furnishings, and Cherokee (ranked No. 10 with $4 billion in retail sales), which focuses exclusively on apparel.

In addition, Salter says HCC also goes across multiple categories and demographic segments. The crossover of brands into all major retail channels helps "to mitigate risk and build value," he adds. "It's one of the best strategies in the marketplace because we are not concentrated in one specific area."

HCC is also bullish on growing its portfolio of licensees, according to what Salter describes as a "best-in-class" strategy. This has already been applied to The Sharper Image, for example, acquired last year, and already lists an impressive group of licensees, including Southern Telecom, Samsonic Trading, Golden State Imports International, MZ Berger, NYL Holdings, Famous Trails, CTI International Group, STL Electronics, The EnE Group and MerchSource that were added or re-signed in March.

According to Salter, HCC is projected to generate over $1.4 billion in worldwide retail sales this year. He projects retail sales will top $2 billion in 2010 and $3 billion in 2011 based solely on existing brands. However, Salter points out that if HCC makes additional acquisitions and expands licensees into more categories, as is the plan, the numbers will increase.

Since the beginning of the year, HCC has already acquired three major brands—Linens 'N Things, Bob Marley and Polaroid—and Salter says the company will continue to make other acquisitions. In fact, he says that HCC is currently in negotiations with another iconic personality and an online retailer. Various media reports have recently linked several brands, including Circuit City, Fortunoff and Eddie Bauer to HCC.

Several of the acquisitions, including The Sharper Image, Bombay, LNT and Polaroid, have been executed as a joint venture with Gordon Brothers Brands, a division of Boston-based liquidator, Gordon Brothers Group.

HCC has high hopes for Bob Marley and Polaroid, in particular, which will become the two largest brands to date in estimated retail sales.

What follows is a breakdown of the 10 brands in HCC's portfolio:

  • Polaroid. The 72-year-old consumer brand, acquired in April, offers significant opportunities for category expansion in electronics and imaging.

  • Bob Marley. In February, HCC announced it would manage and develop a diverse consumer products program for the legendary Jamaican musician in anticipation of the 65th anniversary in 2010.

  • Linens 'N Things. In February, HCC and Gordon Brothers jointly acquired the home and housewares brand, which at its peak had almost 600 stores in North America. The strategy includes e-commerce, which is already operating at lnt.com, DTR licensing and a shop-within-a-store concept, which Salter says is how the retailer started originally almost 40 years ago.

  • The Sharper Image. The iconic brand, which was acquired in June 2008 for almost $50 million, is developing upscale and innovative products in electronics and home available in several retailers, including Macy's, Bed, Bath and Beyond, Staples and Office Max. The company recently introduced a SoundBag, a portable speaker system in a backpack.

  • Bombay. The home furnishings brand was acquired February 2008 and is establishing a global licensing strategy targeted to mass and mid-tier department stores.

  • Ram. This everyday golf brand, acquired in August 2007, is sold exclusively in Sports Authority stores in the U.S.

  • Tommy Armour. This golf brand, founded in 1986 for the pro golfer, was acquired in August 2007 and is being expanded into numerous lifestyle categories, including apparel, luggage, sunglasses, hats, handbags, fragrances, glassware, outdoor furniture, spirits, bars and golf schools.

  • Halston. Acquired in March 2007, the luxury fashion brand was relaunched with high-end retailers, and a DTR licensing program is being developed.

  • Ellen Tracy. The traditional women's sportswear brand is being positioned as a bridge segment (between $400 and $1,200) in career, casual, sportswear, knitwear and dresses targeted to affluent women over 40.

  • Caribbean Joe. The company plans to expand the moderately priced casual brand acquired in 2007 and reposition it as a year-round line.

With the broad range of brands, demographics and retail channels, it's clear why Salter calls it "a mass-to-class strategy."

He credits an "experienced management team, disciplined purchasers and a full complement of consumer product services and expertise from its parent company" as advantages in the marketplace. He also says that a strategic partnership with Gordon Brothers has enabled HCC to have a broader understanding of the retail marketplace.

With the core disciplines in place, a portfolio of established brands and a strong position in brand licensing and retail, HCC appears well positioned for the future.

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