In the first quarter of 2020, Marc Miller, CEO of SPARC Group — the joint venture between Simon Property Group and Authentic Brands Group — was completing the turnaround of two brands (Aeropostale and Nautica) and finalizing the acquisition of Forever 21 in partnership with Brookfield Property Partners.
Since that time, the company’s portfolio has grown dramatically following its purchase of Brooks Brothers and Lucky Brand in August, after both filed for bankruptcy amid the extreme challenges of the COVID-19 health crisis. And earlier this month, ABG and SPARC acquired outdoor label Eddie Bauer.
As part of that latest deal, the Eddie Bauer team, headed by current CEO Damien Huang, will partner with SPARC to manage the brand’s sourcing, product design and development, as well as wholesale, planning and allocation for its e-commerce site and 300 brick-and-mortar stores, primarily located in the U.S. and Canada.
Here, Miller shares with FN a few pages from his playbook in terms of merging these businesses and returning them to top strength.
You’ve been on quite a buying streak. How is the integration going so far with the new brands?
Marc Miller: Yes, it’s been a really busy time. All great brands, great teams, where we’ve been able to take the momentum that they already had, some great talent and supplement that as well. With Lucky, for example, we’re able to utilize [president and chief merchandising officer] Natalie Levy and [SVP of design] Amie Goeller and everything that they possess from a product development and design perspective and bring that to the process at Lucky Brand. It’s been synergistic that way. And then for some of the brands on the West Coast, like Forever 21, we get our own perspective to see what’s trending, and with the stores, we can look at their best sellers and see what’s right and appropriate for our customer and vice versa. So there’s great information sharing that way.”
How does a brand like Brooks Brothers mesh with the younger brands like Aero, Lucky and Forever 21?
MM: No matter what, there are still similarities — in literally every business there’s knitwear, for instance. So from a sourcing standpoint, there’s some level of vendor overlap and sharing, regardless of which brand it is — less so for Brooks Brothers. But from that respect, we’ve also aligned with shared services, things like accounting, finance, HR, IT, logistics, like the distribution centers and supply chain. Those are things we’re able to bring to bear — the collective platform — and then figure out how to optimize it as we bring in these new brands.
What are some of your key goals for the businesses this year?
MM: “It varies by brand because some are newer to [the group], and they’re at different stages. I always think about it as an S curve in terms of growth and development. So Aero and Nautica, of course, are furthest along and they’re having a great year, and it’s about building on the momentum that was already present there. For Nautica, we’re increasing some of their wholesale distribution even beyond where it was. For Aero, it’s been about solidifying our connection with that in Gen Z customer.”
And how about for the newer additions to the portfolio?
MM: “Forever 21 we’ve had for a little over a year, and year one when we acquire a brand out of bankruptcy, it’s just about stabilizing the brand because you can imagine the shocks that happen when a business goes through Chapter 11 — whether it’s supply chain disruptions, vendors who don’t want to work with you or the employees are scared. Now in year two with us, they’re in growth mode and the stores have been performing great. And we’re learning they have a big e-commerce business, so we’re actually sharing some of their best practices and coming up with a common platform across all of our brands. With Lucky and Brooks Brothers, it’s been about reassessing the product vision and brand DNA. Who do we want to be and what do we want to stand for? For those two brands, in particular, we invested in some design talent and some key people who have helped define that for us. And this fall, we’ll see the very first output from those teams, which we’re excited about.”
What’s your outlook for the most recent purchase, Eddie Bauer?
MM: “It’s so different from the other brands. First of all, it was not troubled. The others we acquired out of bankruptcy — they were in bankruptcy for different reasons, but they had some challenges. Eddie Bauer actually had nice momentum and they’re positioned so well. Outdoor is white hot. And they’re a family outdoor brand, too, so they can play [anywhere]. I don’t even think we fully recognized until we started getting into our diligence of the brand, but its heritage is incredible. It’s 101 year old brand. They’d gone through a period where they tried to become a lifestyle brand, but about eight years ago, they really started to return to their roots in sport and performance and outdoors. So what we’ve learned, which is so exciting, is that in a white hot space, it’s a brand that travels well at wholesale as well as at retail. There are so many retailers interested in bringing it in, and they never really invested in having the wholesale distribution.”
How is the M&A market looking for 2021? Are there still opportunities out there?
MM: “There were brands that were already in trouble heading into COVID, and for those brands, COVID accelerated their issues, which created some of those buying opportunities — or unfortunately, caused them to go away. I think what you’re seeing now is apparel is bounced back and in a much bigger way and much more quickly than I think a lot of people suspected a year ago. So those opportunistic buys may not be as readily available right now. But between our two owners — and Authentic Brands Group, they’re a licensing company — so if there’s a brand out there that’s potentially available, we’ll be looking at it.”
