The traditional licensing model is so…1999.
The days of brand owners just signing licensees for different categories and waiting for the royalty checks to roll in is no longer the best way to build a business.
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Neil Fiske, chief executive officer of Marquee Brands, referred to that outdated strategy as Marquee 1.0. But since joining the company in September 2020 as its first CEO, Fiske has been working to create Marquee 2.0, a new operating model that centers around building the brands within its portfolio rather than simply owning them. Marquee manages a portfolio with $3 billion in retail sales including Martha Stewart, BCBG Max Azria, Ben Sherman, Dakine, Sur La Table, Body Glove, Emeril Lagasse, Motherhood Maternity, A Pea in the Pod and Bruno Magli.
On April 18, Fiske will officially welcome an apparel industry veteran with a track record in digital, business and brand building to help him achieve his goal to create a more modern Marquee. That executive is Heath Golden, the former president and CEO of Hampshire Group and the current executive vice president, chief financial and strategy officer for Randa Apparel & Accessories.
Fiske himself was president and CEO of the Gap brand before joining Marquee and, over the course of his career, also served as CEO of Billabong International, Eddie Bauer and Bath & Body Works.
Although Marquee has amassed a stable of well-known brands and built a profitable business since its founding by Neuberger Berman, a private equity investment firm, seven and a half years ago, Fiske envisions a lot of potential.
“I believe our existing portfolio can be two to three times the size without any other acquisitions,” he said. “We have $3 billion in total retail sales and will grow more than 20 percent this year. And we think we can also double our profitability year-over-year.”
What’s led to that optimism is the company’s work over the past 18 months to address the changing consumer and retail landscape. He said the direct-to-consumer part of the business over the past two decades has been growing at some 18 to 19 percent annually and consumer phones have become the new flagship stores for most companies.
“In a traditional licensing model, everything gets pushed out [to licensees], but we wanted to pull everything together in a holistic experience with digital flagships,” he explained.
So with Martha Stewart, for example, Marquee built Martha.com, which launched in September featuring a wide range of topics ranging from recipes, decorating and wellness tips to shopping links for kitchen, dining, food, wine and fashion.
Martha Stewart, which Marquee purchased along with Emeril Lagasse from Sequential Brands for $175 million with an earn-out opportunity for an additional $40 million in April 2019, has a lot of room for growth. Fiske believes Martha Stewart, which is currently a $1 billion brand at retail, can easily grow to triple or quadruple that size. He pointed to her February launch of a chardonnay with Treasury Wine Estates and said the wine already ranks number one or two in its class. Ditto for her CBD brand, which is already the second most popular in that industry.
Photo courtesy of Martha Stewart CBD
“Her ability to create, market and scale is incredible,” Fiske said.
The Martha Stewart brand is part of Marquee’s Home division, which also includes Lagasse and Sur La Table, a brand it picked up for $89 million in August 2020. Fiske sees big potential for this culinary products brand because of the heightened focus on homes and families during the pandemic, a trend that continues today.
He sees the second biggest growth opportunity coming from Marquee’s Motherhood division, which encompasses Motherhood Maternity and A Pea in the Pod, which it purchased in late 2019 for $50 million.
Fiske sees further opportunity in Marquee’s Active Outdoor brands, which include Body Glove and Dakine, a category that has also experienced unprecedented growth since the start of the pandemic. And with return to work and events, Marquee’s fashion division — BCBG Generation, BCBG Max Azria, Ben Sherman and Bruno Magli — is benefiting from consumers updating their wardrobes.
“There’s really no weak link,” Fiske said. “We’re staying focused on where we can win and making our brands bigger.”
That’s not to say that the company won’t buy other businesses to add to its portfolio. Fiske said Marquee has “a good deal of dry powder for additional acquisitions” and expects to add one to two brands a year going forward.
“But the filter is different,” he said. “We don’t need to do a lot of deals to grow anymore. And any brand we buy needs to fit into the Marquee 2.0 model and be additive to the business.” He pointed to Sur La Table as a “natural overlap” to Martha Stewart, as illustrative of his thinking.
Fiske described Marquee 2.0 as a collision of “media, content and commerce.” Personalization, or providing “hyper-relevant content” to each customer, is a key component of this. Marquee is working to gather data from each consumer to ensure its communication is targeted to their specific needs. For instance, if a consumer goes to Martha Stewart to help plan their wedding, they can then be directed to Sur La Table for setting up their homes, BCBG for their bridesmaids’ dresses and, eventually, A Pea in the Pod for their pregnancy needs.
“We’ve spent the last 18 months [evolving] Marquee from a brand licensing company into a brand accelerator,” he said. “It’s consumer-centric, digital first and d-to-c-led,” he said, “which is a 180-degree change from the traditional licensing model.”
While the ultimate goal is to sell product, he’s taking a page from Martha Stewart’s book where she preaches that the best way to build sales is to “teach, make and buy,” he said. “It’s easier to bring more brands into that platform.”
In order to continue on the journey to create Marquee 2.0, Fiske recognized that he needed a strong number two — and that’s where Golden comes in. “We’ve completed the foundational work and the company is growing, but to accelerate that, we needed someone of Heath’s talent and leadership,” he said.
Golden, whose title will be chief commercial and strategy officer, said he wasn’t looking to change jobs but after meeting Fiske, he felt they were “kindred spirits” with the same vision of where the world is headed and how to capitalize on that potential growth. “The brands that win today are the ones that add value to your life,” he said.