In Control

Licensors in the fashion and luxury industries accomplish their brand-extension activities, especially in international territories, in a variety of ways, including through licensing agreements, joint ventures, or owned subsidiaries, or even sometimes from their central headquarters. While each company has a different strategy depending on the particulars of its own business, the industry as a whole seems to move from favoring one to another of these strategies on a cyclical basis.

If recent events are any indication, luxury and fashion licensors in general seem to be trending toward internal management and away from licensing, joint ventures, and other forms of external partnership:

  • Callaway Golf bought the 48% it did not already own of its apparel joint venture in Japan from its partner TSI Groove & Sports Co. The two launched the business in 2016. The unit operates under the name Callaway Apparel K.K. and designs, manufactures, and sells Callaway apparel, headwear, and footwear in Japan.
  • PVH Corp. acquired the 78% of shares it did not own in Gazal Corporation Limited, its long-term partner in Australia. The former licensee and now subsidiary oversees PVH brands, which include Calvin Klein, Tommy Hilfiger, and others, in Australia and New Zealand. PVH said at the time of the purchase that its strategic priority is to assume more direct control over its regional licensed businesses. Gazal is also a licensee of Pierre Cardin for shirts in Australia and tailored suits in Australasia.
  • Prada purchased retail operator and Prada franchisee Fratelli Prada, based in Milan, bringing Prada’s retail operations in the region—including the label’s flagship store—under internal oversight. (Prada headquarters is also based in Milan.)
  • Tapestry acquired operational control of Kate Spade Joint Ventures, its business unit for that brand in Greater China. It also purchased the Stuart Weitzman business from its distributor in northern China, bought back the Coach business in Australia and New Zealand from its distributor there, and made similar moves with some of its brands in Malaysia and Singapore.

The first three of these bullet points occurred in 2019 and the last in 2018.

In some cases, taking back rights is not a matter of wanting more control but simply an acknowledgment that a certain market is not working. In November 2019, American Eagle announced the end of its licensing deal with Eagle Retailing, a joint venture between Aoyama Trading and Sumikin Bussan Corporation that launched in 2010. Most recently the venture maintained 33 Aerie by Aoyama innerwear stores in Japan, along with an e-commerce presence. The end of the license in this case means the closing of all the stores and the online site.

Raugust Communications’ monthly e-newsletter will be distributed tomorrow, December 17, 2019. The Licensing Topic of the Month examines trends in subscription retail and etail models, while the Datapoint research spotlight analyzes how the experiential licensing landscape has changed over the past two years. If you have not already done so, you can sign up for this free publication here.

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