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Licensing partnerships are a growing part of the fashion business.

NEW YORK — When it comes to the apparel industry, licensing is more important than ever.

According to License magazine’s industry annual report from October 2005, licensed merchandise worldwide brought in about $175.3 billion in worldwide retail sales in 2004. Of that number, fashion contributed just over 21 percent, or $37.3 billion, up from $37.1 billion in 2003.

Although many apparel companies have had major success with licensing agreements, for companies looking into licensing, experts say there are many factors to keep in mind.

“What a lot of brand owners do not realize is the amount of labor that goes into the apparel sector of licensing,” explained Michael Stone, chief executive officer of The Beanstalk Group, a New York-based brand licensing and consultancy firm. “In apparel, fresh product has to be redesigned and re-created at least four times a year. It isn’t the same for many other products like home furnishings, dinnerware or toys. There are a lot of stockkeeping units with apparel, so it’s a huge undertaking.”

That’s why, Stone stressed, it’s so important to find a licensee who not only understands the brand, but one who has the capability to produce so much product.

Stone helps to match brands with licensing partners and has struck deals for the Olsen twins’ mary-kateandashley brand at Wal-Mart and Andy Warhol with Levi’s. Additionally, Salma Hayek recently signed a deal with Beanstalk to help her find the right partners for a beauty line aimed at a Hispanic audience.

“There’s the JLo brand, Thalia for Kmart and Daisy Fuentes at Kohl’s,” Stone said. “But there seems to be a lack of health and beauty brands to serve the Hispanic consumer.”

Meanwhile, the Olsen twins’ brand continues to perform well, and Stone predicted there is still room for growth. “Now we are looking to launch a slightly higher-end junior line with them, which I think could work very well since the girls are so involved with the business and are known for their fashion sense.”

Stone would also like to see someone enter the market for good-looking boys’ apparel.

This story first appeared in the June 7, 2006 issue of WWD. Subscribe Today.

“Boys want to look cool,” he said. “I really don’t think there’s enough out there for them.”

Lou Schneider, a licensing consultant with more than 30 years of experience, said he sees vintage brands making a big comeback.

“The people who bought the Le Tigre brand have done a great job of bringing it back,” Schneider said. “Now, with so many options in licensing, bringing back an old brand makes great sense.”

Schneider just closed a deal with Harry Adjmi, president of One Step Up. Adjmi bought the Jonathan Logan brand, which was a major misses’ department store label in the Eighties. “I am a firm believer in marketing, which Harry is planning to invest in with Jonathan Logan,” he said. “Without proper marketing, it’s really very hard to sell the product.”

For Jonathan Logan, Adjmi plans to produce plus-size sportswear for women, and then for men. He also hopes to find the proper partners for licensed shoes and accessories, among other products.

“I purchased the Jonathan Logan brand as an opportunity,” Adjmi said. “I see it as a brand that can cross several categories. Baby Boomers know and love this label, and I really believe they would be happy to see it come back.”

Adjmi also holds the license for Beverly Hills Polo and Zena tops. He said that the Jonathan Logan brand will allow him to expand into the misses’ category.

“We already have the junior and the contemporary business,” he said of his more than $250 million company. “Jonathan Logan will open a new set of doors for our company.”

Kelly Payfer, vice president of new business at InGroup Licensing in New York, said that she has seen licensing help brands grow in a major way.

“Take Mudd,” Payfer said. “They came to us when they were a $100 million company. After licensing for products like shoes, tops, handbags and watches, Mudd is a more than $350 million brand, and the licensed products have become bigger than the jeans.”

Besides Mudd, InGroup works with Angels and Hydraulik jeans brands. It also just signed True Religion.

“True Religion is such a hot brand, and I see this as a perfect time to grow it,” she said, adding that the company is interested in expanding into categories like shoes, handbags and other accessories.

Though licensing can mean big business, it is not without its pitfalls. The wrong licensor can take a brand into the wrong distribution channels, ones not fitting to the name. Or, if merchandise isn’t shipped to the retailer on time, the brand name will be at fault, not necessarily the licensor.

“Finding a partner who can understand your vision is key,” said Tammy Smulders, managing director of SCB Partners, a London-based research and marketing firm that specializes in connecting with young consumers. “The proper partnership can expand your geographic reach and help to develop your brand into a lifestyle brand, which almost all brands are moving toward.”

Smulders, who has worked with a range of companies — from Coca-Cola to Coty and American Express — said that she sees fashion brands moving toward nontraditional partnerships, such as Versace opening hotels and Nine West bringing in Vivienne Westwood to design a capsule collection.

“There have been many brands damaged by licensing, but I think the business has become much more sophisticated and we have learned a lot,” she said. “As long as there are strict guidelines on both sides and the licensee and licensor understand the vision of the brand, licensing can be a great thing.”

Licensing Industry Numbers
(Source: License Magazine’s Industry Annual Report, October 2005)
2004 Estimated Worldwide Retail Sales, Licensed Merchandise
$175.3 billion
$40.0 billion
$37.3 billion
Brands & Trademarks
$35.5 billion
$20.8 billion
Art & Publishing
$18.6 billion
$18.0 billion
Online & Interactive
$5.09 billion
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