A Nautica store in the Dubai Mall.

Jamie Salter’s birthday gift to himself over the weekend was the signing of an agreement to acquire Nautica from VF Corp., but Authentic Brands Group will have a lot of work ahead as it builds out the brand’s product line.

Nautica represents ABG’s largest acquisition to date and is expected to close in the second quarter. Once closed, ABG’s brand portfolio will total nearly $7 billion in annual global retail sales, putting the group one step closer to its goal of $10 billion in global retail sales by 2020.

Salter, ABG’s chief executive officer, said, “Nautica is a world-class brand.” He noted that the company has 270 retail locations globally and “5,000 points of distribution around the globe.”

Nautica was founded by David Chu in 1983, and was acquired by VF Corp. in 2003 in a transaction valued at $600 million. Its department store channel presence is primarily Macy’s, although the line is carried at other retailers such as Dillard’s. But the brand in the past has seen its share of promotions at the department store channel.  Further, the 73 stores in the U.S. are only in the outlet channel, all of which has given the impression — at least in the U.S. — that the brand is a promotional label. A move in late 2015 to revamp Nautica through a VF-sponsored consumer segmentation study and institute a good-better-best strategy was a failure, and the brand’s only full-price store in SoHo closed after a short period of time.

The Nautica brand is more popular internationally where it has an upscale, aspirational reputation. Women’s wear is also a major part of the international business. There are more than 200 full-price stores internationally, and the brand has 50 licensees in 75 countries. China, the Middle East and Latin America are likely the more logical areas for expansion under ABG’s ownership.

One bright spot for the brand is its collaboration with rapper Lil Yachty, who was named creative designer in 2016. The rapper and the brand collaborated on a collection of limited-edition pieces based on vintage Nautica designs, and that relationship has continued to date. Sales of the product have helped lift the brand in recent months.

Nautica has more than $1.2 billion in annual retail sales. According to Salter, “We will expand Nautica’s consumer product categories and presence around the world. We are also seeking long-term retail partnerships to strengthen the brand’s business globally.” The ceo said there’s opportunity for the “marine” theme, and for footwear, and noted that there is also greater room for the brand to broaden its ‘outdoor” presence, which it isn’t in now.”

ABG has partnered with Simon Property Group and General Growth Properties to form Aero OpCo, which operates the stores for teen retailer Aéropostale — Salter’s ABG led the consortium that acquired the IP and other assets out of bankruptcy in 2016 — and also handles the wholesale business for the brand. After ABG closes on its Nautica acquisition, Aero OpCo will take over Nautica’s retail operations and its wholesale business. All Nautica employees will join Aero OpCo, except for the marketing and licensing staff, all of which will become employees of ABG. ABG, as a brand management firm, will own the IP assets.

Sources on Monday expressed concern over Aero OpCo’s ability to run the Nautica wholesale business, and said ABG would likely need to invest in bolstering the division with experts from the wholesale side.

As for VF, the company has been working on reshaping its portfolio, and has focused more on its outdoor and workwear businesses. Last year it acquired Williamson-Dickie and Icebreaker. That focus has left its fashion brands — such as Nautica — out in the cold. In 2016 it completed the sale of its Contemporary Brands business to Delta Galil Industries Ltd. for $120 million. Last year, it sold its licensed sports group business to Fanatics Inc. It also moved its Lucy Activewear business into a component of sister brand The North Face.


A Nautica outlet store at Great Mall, in the San Francisco Bay area.  Shutterstock / Sundry Photography

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