The recent collapse of British retailer Ted Baker has cast a shadow over Authentic Brands Group (ABG), the company that acquired it in 2022. This development has sparked a debate about ABG's business model and its ability to resurrect struggling brands.
In the summer of 2022, ABG, led by Jamie Salter, purchased Ted Baker for £211 million. However, by March 2024, the retailer's UK and Irish operations entered administration, leading to the closure of all stores by August 2024. This rapid decline has raised questions about ABG's strategy and its long-term viability.
ABG, founded by Salter in 2010, has grown into a licensing powerhouse with a portfolio of over 50 brands. The company's approach involves acquiring intellectual property rights and licensing them to third-party operators. This model has led to significant growth, with ABG's brands generating a combined turnover of approximately £30 billion.
However, Ted Baker's failure is not an isolated incident. ABG has faced challenges with other acquisitions, including:
- Sports Illustrated: A legal battle with licensee Arena over missed payments
- Forever 21: Struggling with financial difficulties and competition from Chinese rivals
- Reebok: Rumors of a potential sale after its $2.5 billion acquisition in 2021
These issues have led some industry observers to question the sustainability of ABG's rapid expansion. One executive likened it to an asset bubble requiring a "value correction."
Salter's background offers insight into his aggressive approach. Starting as a teenage windsurfing equipment salesman, he later founded the snowboard brand Ride, which went public in 1993. His experience at Hilco Global from 2006 to 2009 laid the groundwork for ABG's creation.
"We have acquired over 50 beloved global brands, often from difficult financial circumstances, and given them a new lease of life. We find the best partners, while we develop further partnership deals for the brands and best in class marketing. Over 99pc of partnerships across our brands have been mutually beneficial in creating long-term value."
Despite these challenges, ABG continues to expand. Recent acquisitions include Quiksilver for $1.3 billion in 2023 and Champion sportswear for $1.2 billion in June 2024. The company has also diversified its portfolio by partnering with celebrities like David Beckham and Shaquille O'Neal, who have become shareholders.
ABG's future plans include further expansion into beauty and children's brands, as well as entering markets in Latin America, Asia, and the Middle East. However, the company's rapid growth and diverse portfolio have led to comparisons with sprawling conglomerates, raising concerns about potential risks.
As ABG eyes a potential stock market listing in 2026, the Ted Baker failure serves as a cautionary tale. The company's ability to address these challenges and demonstrate sustainable growth will be crucial in determining its long-term success and investor confidence.