Sequential Brands CEO Talks Plans For Jessica Simpson & Ramping Up Athletic

Executives dash in and out of the Jessica Simpson showroom, which is lined with racks of denim pants, trendy blouses and handbags bearing the label of the billion-dollar fashion brand. A freshly made-up model struts across the floor en route to her next close-up as a hip-hop tune reverberates from the room’s speakers. Just outside the door, an aroma coming from the kitchen of Martha Stewart has spilled into the hallway.

Navigating this maze of rambunctious activity at Sequential Brands Group Inc.’s New York headquarters is CEO Yehuda Shmidman. This is the house that he built.

In 2015, Shmidman — who took the helm of the brand management firm three years prior — led Sequential to add three notable names to its roster. The 35-year-old mogul snapped up a majority stake in the Jessica Simpson label from Camuto Group in April. A few months later, in a bid to make its mark in media and housewares, Sequential announced its merger with Martha Stewart Living Omnimedia Inc. The acquisition of Joe’s Jeans Inc. followed in September.

And 2016 is not a year of tapering down for the firm. Last week, Sequential announced its purchase of popular yoga brand Gaiam.

Yehuda Shmidman Sequential
Yehuda Shmidman.
CREDIT: Courtesy of Sequential Brands Group.

This company has come together, and the table is set for the next chapter of growth,” Shmidman told Footwear News during a tour of the company’s headquarters last month. “The first few years of Sequential — and we’re still a young company — were about building the team, the infrastructure and the brand portfolio. If you look at what we are today, we’ve got a well-oiled machine with terrific people and brands that matter.”

In January, Shmidman moved most of Sequential’s labels and its people into Martha Stewart’s giant headquarters in the Starrett-Lehigh Building, overlooking New York’s Hudson River.

There is a team and a resource pool here that are dedicated to growing these brands,” Shmidman said, adding that the brands are finding new synergies in the shared space. “I think that’s why Jessica Simpson chose to work with us and why Martha Stewart chose to work with us — we want to make sure that one day when you go back and ask them, they’ll tell you that.

Tina Simpson, co-creative director and brand manager for the Jessica Simpson Collection, said the choice to align with Sequential was a well-informed one that is already yielding positive results.

Our partnership with Sequential last year was strategic,” Simpson said. “They had the best team in place to help us continue to build off the successes of the past 10 years and, more importantly, launch a new phase of category growth.”

While Simpson’s team may have jumped at the opportunity to partner with Sequential, competition in the brand management space is heating up. As an increasing number of private equity firms engage in heavy bidding for top footwear and apparel names, there has also been instability in the arena. The public struggles of Iconix Brand Group Inc. threatened to cast a negative light on brand management companies.

Canaccord Genuity Inc. analyst Camilo Lyon had even posited that “turmoil” at Iconix — owner and licensee for brands such as Candie’s, Ed Hardy and Material Girl — inadvertently pressured Sequential’s stock last year.

Still, Sequential continues to make major revenue gains, seeing a 150 percent rise in sales in the most recent quarter while expanding the reach of its new and existing brands.

When Shmidman got his hands on the Jessica Simpson brand, it was already raking in billions, but the CEO said he quickly began thinking of untapped categories for growth.

One of the areas we felt we could add to the brand was activewear,” Shmidman said. “We launched apparel activewear in the fall of 2015, and we will be launching fashion athletic footwear for fall ’16. I think that’s going to be a big business.

Tina Simpson, who is Jessica Simpson’s mother as well as her top partner in the label, shared Shmidman’s enthusiasm about taking the brand into the athletic space.

Jessica Simpson Debuts Active Shoes
Jessica Simpson active shoes for fall ’16.
CREDIT: Courtesy of brand.

The strategy for building the Jessica Simpson lifestyle brand is a very organic, natural one,” Tina Simpson said. “We have allowed Jessica’s true lifestyle to reflect [the] categories we build. This way we keep the brand real, authentic and true to who Jessica is herself. She is an avid workout guru who does cardio, weight training, plyometrics and yoga.”

Not to mention that the athletic space is red-hot right now. And Shmidman and his team are getting more aggressive about pushing their brands — And1 and Avia — that play heavily in the space.

Both the Avia and And1 businesses had a very strong 2015,” Shmidman said. “As a company, we are doing about a half a billion dollars in footwear. Within that total, a good chunk of that is in the athletic space.”

Last month, the firm announced the launch of And1 in Wal-Mart stores in Canada. It has plans to grow its other athletic-inspired shoe label Heelys with more branded partnerships, including one with Disney’s “Frozen” franchise.

Heelys spring '16
Heelys spring ’16.
CREDIT: Courtesy of brand.

“Heelys is the biggest driver in our lifestyle business,” Shmidman said. “We have an incredible manufacturing partner in BBC [International]. We’ve been seeing an uptick in our U.S. business and in international, particularly in Europe and Asia.”

With footwear driving a large share of his firm’s revenues, Shmidman now has plans to ramp up the shoe business for several of the company’s apparel labels.

We have plans in store for William Rast in footwear — especially on the men’s side with both casual and dressy sneakers,” he said. “We also have some new footwear initiatives in the works for Joe’s Jeans. In addition to the existing shoe business that we have under the Sequential umbrella, we’ll have some new things coming this year.”

(Editor’s note: This story originally appeared in the May 16, 2016, issue of Footwear News.)

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