Market Overview

Exclusive: Sequential Brands CEO Talks Latest Acquisition, Company's 'Playbook'

Exclusive: Sequential Brands CEO Talks Latest Acquisition, Company's 'Playbook'
Here Are All The CEOs Benzinga Spoke With In 2016
PVH, Coach, Sequential Brands: Piper's Most Compelling Names Heading Into 36th Consumer Conference

Yehuda Shmidman, CEO of Sequential Brands Group Inc (NASDAQ: SQBG) was gracious enough to lend several minutes to Benzinga to conduct an interview.

Sequential Brands Group owns a portfolio of consumer brands, including Martha Stewart, Emeril Lagasse, Jessica Simpson and Joe's Jeans, among others.

Shmidman On The Company's Latest Acquisition

Sequential Brands Group announced on May 10 it has agreed to acquire Gaiam, Inc. (NASDAQ: GAIA), a fitness products and media company that focuses on the practice of yoga for $146 million.

Shmidman stated that the acquisition will fit in well with Sequential Brands' active division — a segment that has been "so powerful" for the company. In fact, the segment grew by 15 percent last year, which outperformed the company's overall 10 percent growth.

Related Link: How Big Is Under Armour's Women's Biz Opportunity?

"So, you think about the statistics," he added. "There are over 35 million people in America that practice yoga. But even more compelling than that is over 80 million people in America say they aspire to practice yoga."

"We run an asset light licensing business model," he continued. "So the integration for us is the separation of the brand itself, which is what we want to always own and control, and then we actually license the operations to third parties who have lots of scale so they're able to run those operations at a more profitable margin and then in turn pay us royalties."

Shmidman also said that his company has a "clear playbook," which calls for "strong" organic growth in the high single digit range. The company's "playbook" also calls for accretive acquisitions that involve brands which can "grow further in our model."

Other Anchors And Drivers

Sequential Brands' business is composed of four different segments, each of which is "anchored by a strong brand" that represents "strong levers for growth."

The home division features the Martha Stewart brand, fashion features the Jessica Simpson brand, the lifestyle division features the Revo brand and, as previously noted, the active division is anchored by the Gaiam brand.

"We, as a brand owner, are exclusively focused on growing the brands in our portfolio," Shmidman concluded. "We don't have the risk of a typical consumer company. We don't have to buy inventory or have bad inventory sitting in the back. We don't have leases in malls that nobody goes to anymore.

"So if Amazon's growing today, we can go ahead and feature our brands on Amazon. If tomorrow is something different, we are quickly able to go where consumers are shopping. We actually outpace the retail sector because we own brands, not inventory. So, last year when, according to the NRF, retail sales grew 3 percent, we grew 10 percent."

Posted-In: Emeril Lagasse GaiamHealth Care M&A Exclusives Trading Ideas Interview General Best of Benzinga


Related Articles (GAIA + SQBG)

View Comments and Join the Discussion!