- Brookstone found a potential acquirer in Authentic Brands Group, the brand development company that this year also scooped up the Nine West, Bandolino and Nautica brands.
- Brookstone, which filed for Chapter 11 earlier this month, said in a press release that ABG made a $35 million stalking horse bid for the gift and gadget retailer's assets. The proposal includes "an expressed interest in identifying a partner to maintain and maximize Brookstone's iconic retail business," the company said.
- ABG's bid is set to serve as the baseline at a bankruptcy auction for Brookstone's intellectual property and other assets currently scheduled for Sept. 24.
ABG's initial bid on Brookstone is a signal of what may come next for the seller of oddball gifts and electronics. Shoppers in the market for a $150 dollar sweatshirt with a built-in inflatable neck pillow and sleep mask need not despair.
The bid also signals ABG's willingness to branch out beyond apparel and its adjacent categories, like shoes and handbags, which the Nine West acquisitions brought into the fold.
"While Brookstone is obviously not an apparel brand, it does have a well recognized brand name in the retail space, having been around since 1965," Moody's analyst Brian Silver told Retail Dive in an email Tuesday. "We view Brookstone as a hybrid, in that it is both a brand from another era and a challenged brand that has underperformed but not necessarily fallen out of favor with consumers. Given the right licensee to work with, we believe ABG has the tools and prior experience to improve the brand's performance over time. "
The holding company has been hungry for brand properties of late, as plenty of opportunities have bubbled up in a suffering specialty retail climate and spate of bankruptcies. Nine West represents what Silver in a previous interview called "orphan brands" that ABG has added to its portfolio along with its vintage and celebrity brands (which include Elvis Presley and Shaquille O'Neal).
ABG's "m.o.," according to Silver, is to assess the identity of the brand and then use targeted marketing to drive consumer awareness. ABG also typically looks to expand brands into international markets and through e-commerce. In its latest move to push the Nine West brand, ABG is taking it to Kohl's with an expanded line of products.
It's worth noting that most of ABG's growth — which is held by private equity firms Leonard Green & Partners, L.P., General Atlantic and Lion Capital — has been financed with debt. Even so, ABG generates "solid cash flow" through its model, Silver said in an April note. ABG keeps its books light on assets and liabilities, shifting them to third-party licensees, and generates revenue royalty payments.
Brookstone, which is on its second Chapter 11, has said previously that it intends to wind down its brick-and-mortar stores in malls through the bankruptcy process so that it can focus on its profitable airport, wholesale and e-commerce businesses.