Jamie Salter, Chairman and CEO of Authentic Brands Group LLC.
Norm Betts | Bloomberg | Getty Images
He helped save Barney’s from liquidation last year and plucked retailers Brooks Brothers and denim clothing maker Lucky Brand from bankruptcy this month – just warming up for Jamie Salter.
“I’m in the first inning,” said Salter, the 57-year-old chief executive officer of the apartment licensing firm Authentic Brands Group.
Salter may not be a household name, but he may be one of the best opportunities in the sector to save long-love brands from joining Woolworth and Blockbuster as a once-great ek-rans. Numerous retailers were already on the verge of solvency before the coronavirus pandemic hit, accelerating the 44 retail bankruptcies and more than 6,000 store closures already announced this year.
That provides an opportunity for a company like Authentic Brands Group, which generated $ 15 billion in annual retail revenue before Covid-19 arrived in Wuhan, China eight months ago. He said he recently received a fresh $ 600 million capital infusion from sponsors BlackRock, General Atlantic and Leonard Green & Partners for more deals. That Salter is now sitting on a lot of money and is on the hunt for deals.
“We have more than $ 1 billion in dry powder … and I have not increased the company,” he said in an interview Friday.
Authentic Brands and the largest mall owner Simon Property Group have formed a joint venture called Sparc, which pays $ 140.1 million for Lucky Brand, and saves their stores and website. And Sparc’s $ 325 million bid to bankrupt Brooks Brothers and save at least 125 stores has just been approved and is expected to close later this month.
“People ask me, ‘Jamie. Shopping crowd? I’m not getting it,’ ‘Salter said.” What I’ll tell you is we need brick and mortar. Retail really needs it. ”
For an industry that has already struggled to compete with Amazon, the coronavirus pandemic has now pushed dozens of retailers over the edge with permanent shopping clubs assembled by the thousands. And the unrest is not expected to slow down anytime soon.
Salter, however, is not looking to just buy. He said he is looking for crippled companies with good real estate and international recognition.
“The markets that do not have stores are harder to market and expand worldwide,” he added. “You need a footprint and a supply chain. Those are two critical parts of running a business.”
Authentic Markets has a history of stocking hobbled retailers. The brands under his umbrella include Barneys New York, Forever 21, Aeropostale, Nautica and Nine West – many of the stores in a typical suburban mall. It made its first deal with Simon in 2016 when Aeropostale bought out of bankruptcy for $ 243.3 million. A few years later, it paid $ 81 million, along with Simon Property and Brookfield, for teen retailer Forever 21.
“The shopping center is still important to build market value on a global basis,” Salter said.
Sparc came to fruition after the Aeropostale deal, said Sparc CEO Marc Miller.
“We see ourselves becoming the world’s leading market operator,” said Miller, who was chief officer at Aeropostale.
“At a time when retail is under unusual pressure, we have the opportunity to use a solid cost base,” he said, explaining that Sparc is able to spread spending across its multiple markets. “There are economies of scale … sourcing power. You win that kind of economy.”
And where Simon Property brings expertise in retail real estate and lease negotiation, Authentic Brands Group brings its extensive background in licensing and manufacturing, he said.
Shoppers should expect some changes to their favorite brands purchased by Sparc. Miller and Salter have plans to mix things up at Lucky and Brooks Brothers by expanding the latter in selling men’s groom products.
“You want to diversify, diversify, diversify,” Salter said. “That’s why category expansion is so important when you buy these brands.”
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