If vague soundbites and warm words alone were enough to ensure the long-term survival of a well-known retailer then Ted Baker might still be a feature of the British high street.
In the summer of 2022, with the chain struggling to recover from claims of “forced hugging” against founder Ray Kelvin – an allegation he denies – its board agreed to a £211m takeover at the hands of New York-based Authentic Brands Group (ABG).
As one of the largest licensing and brand-management houses in the world, owning the rights to Elvis Presley and Marilyn Monroe’s vast estates, as well as controlling David Beckham’s brand empire, Authentic seemed like a credible white knight.
The firm, led by self-promoting Canadian Jamie Salter, seeks to revive flagging labels by tearing out operating costs and offloading the day-to-day running to third-party licensees while holding onto the associated intellectual property.
Authentic’s “deep industry knowledge” would “enhance Ted Baker’s revenue and profitability”, it pledged.
Even by the fickle standards of the fashion world, the excitement proved to be desperately short-lived. Authentic’s promised restructuring failed to live up to the billing.
Turnover went backwards and the retailer continued to rack up losses in the tens of millions of pounds, according to documents filed at Companies House.
In March this year the company behind the fashion brand’s UK and Irish operations, No Ordinary Designer Label Limited (NODL), crashed into administration. A total of 15 Ted Baker stores closed the following month and the plug was pulled on its remaining 31 shops in August, crystallising nearly 1,000 job losses.
It was the culmination of a protracted attempt to salvage something from the mess – a process that ended in further chaos as a potential last-minute rescue deal involving Sports Direct’s trainer tycoon Mike Ashley collapsed. Authentic’s much-trumpeted reprieve had lasted less than two years.
The inquest into how Ted Baker unravelled so quickly will fall to insolvency experts at the consultancy Teneo. But its demise has also prompted concerns about Authentic.
Some see Ted Baker’s fate as evidence that cracks are emerging in a business that has ballooned into a clothing, entertainment and media colossus, with a $20bn-plus (£15bn-plus) valuation, according to private equity fundraising a little over a year ago.
“People thought the value of a bankrupt brand was zero,” Salter said in a recent interview. “But why would it be zero? So I came up with a strategy to put a value on it.”
Yet questions are being asked about the strength of Authentic’s ability to rescue downtrodden brands. Some critics accuse it of offering little more than a short-term reprieve while it squeezes what’s left out of a business with one foot in the grave. “It’s all smoke and mirrors,” one said.
Having acquired more than 50 brands since its launch, could Ted Baker prove to be the first of several casualties resulting from Salter’s dizzying buyout spree?
Toronto-born Salter has come a long way from the days he spent selling windsurfing equipment as a teenager. A move into snowboards was more successful – Salter set up his own brand Ride, which he took public in 1993.
His big breakthrough came in 2006 when he convinced Jeffrey Hecktman, founder of distressed investment giant Hilco Global to launch a venture that would buy disowned IP on the cheap and resurrect the bankrupt brands through lucrative licensing agreements.
Yet, Salter’s time at Hilco was short-lived when he was sacked after just three years. In a recent interview with Bloomberg’s Businessweek magazine, Salter says Hecktman fired him, seemingly over a confrontation between Salter and Hollywood power broker Ari Emanuel during deal negotiations involving Polaroid and Emanuel’s client Lady Gaga.
Better known for her singing prowess than her insolvency acumen, Hilco had persuaded Gaga to become the unlikely face of its attempts to reinvent Polaroid for the digital age.
Salter claims the real reason he was dismissed was because he wanted to lead a management buyout at Hilco.
Others have claimed Lady Gaga took personal offence at something Salter said to her that night and demanded that he face the axe.
Those who have dealt with Salter say one of the first things you notice about him is how small he is. Another is that he seems determined to make up for it by being the loudest person in the room.
“He has short-man syndrome – he doesn’t listen but he talks at a thousand miles an hour. The first time we met him he spent the first 15 minutes telling us how wonderful he was,” one investor says.
Another claimed Salter describes himself as having “10 times more testosterone” than fallen Topshop tycoon Sir Philip Green – a man so combative he allegedly once threatened to throw a colleague out of a window.
There seems less chance of Salter being ousted from Authentic – for now at least.
As founder, executive chairman, and chief executive, he is omnipresent, and the company he has built is very much a family affair with all four of his sons employed at Authentic, including Corey as chief operating officer.
But the sudden disappearance of Ted Baker shops from the British high street threatens to cast a long shadow over Salter’s empire-building.
Authentic paid £211m to acquire Ted Baker, a figure restructuring specialists say was far too high for an outfit that had notched up more than £150m of losses over the previous two years. “They overpaid,” said one.
Others blame Authentic for failing to address Ted Baker’s underlying operational problems, at the same time as demanding unaffordable royalty fees.
“There was no turnaround and the royalty fee they charged meant it ran out of money. They could’ve solved the cash-flow problems by putting that back in,” a creditor to the chain said.
A licensing expert said Authentic had hugely underestimated the working capital needed to fund Ted Baker’s day-to-day trading.
Authentic’s strategy chief John McNamara has laid the blame at the door of AARC, a little-known Dutch company that was selected to run Ted Baker’s UK shops.
“Despite our tireless efforts, the damage done during a period under AARC in which NODL built up a significant level of arrears was too much to overcome,” McNamara said last month.
Almost a decade and a half after setting up Authentic with backing from financiers Leonard Green, Salter has turned it into a licensing juggernaut whose brands generate a combined turnover of around £30bn.
Billions more in capital have come from private equity firms General Atlantic, CVC, and HPS, as well as fund manager Blackrock.
Throw in the combined revenue of its closest rivals WHP, Marquee Brands, Bluestar and Iconix, and the licensing industry has mushroomed from a $5bn market into a roughly $50bn one in just five years. Senior figures believe it could double in size again over the same time frame.
However, as well as Ted Baker, there are concerns surrounding some of Authentic’s other deals.
Its ownership of American magazine Sports Illustrated has descended into a bitter court battle with the licensee Arena after it failed to make a $3.75m quarterly payment to Authentic.
In a 51-page lawsuit filed in Manhattan federal court, Authentic accuses Arena’s largest shareholder Manoj Bhargava of behaving “like a gangster”. Arena has countersued for damages of $200m, accusing Authentic of “strip-mining its license partners”.
Meanwhile, Salter has called the purchase of Forever 21 “probably the biggest mistake I made.” Financial struggles at the fast fashion chain have prompted it to ask landlords for rent cuts, while the extraordinary rise of Chinese rivals Shein and Temu in America has compounded its woes.
Doubts have also emerged about the future of Reebok, which Authentic bought in 2021 for $2.5bn – its biggest deal to date – after Salter indicated a willingness to sell it during negotiations with Mike Ashley’s Frasers over the future of Ted Baker’s UK operations.
However, Frasers’ insiders say the company baulked at the large royalty fee that Salter was demanding in return for handing over both companies.
The setbacks point to an organisation in a hurry. Sceptics say the nature of the Authentic model, which is reliant on snapping up troubled businesses in need of cash, means there is a need for Authentic to keep adding to its haul.
But as the number of brands Authentic buys increases, the potential for further problems like those encountered with Ted Baker, rises too.
One top executive likens it to a classic asset bubble that requires a “value correction”.
A spokesman for Authentic said: “We have acquired over 50 beloved global brands, often from difficult financial circumstances, and given them a new lease of life. We find the best partners, while we develop further partnership deals for the brands and best in class marketing. Over 99pc of partnerships across our brands have been mutually beneficial in creating long-term growth in value.”
With private equity and the debt markets seemingly happy to continue providing the firepower for Salter to remain on the acquisition trail, he has taken increasingly bigger bets.
Authentic’s swoop for Reebok was followed by the $1.3bn purchase of the company behind surf label Quiksilver in 2023, and in June a $1.2bn deal was struck to purchase the Champion sportswear brand. Ringing value out of established international brands like these could prove considerably harder.
Tension may be building elsewhere too. As Authentic has grown, Salter’s lifestyle has increasingly mirrored that of the celebrities he’s teamed up with.
In between adoring posts on Instagram about his family– one commemorates Salter’s receipt of a “Father of the Year” award – his profile is a steady stream of parties and dinners, interspersed with boat trips, and even the odd helicopter ride.
Familiar faces include Beckham and basketball superstar Shaquille O’Neal – both of whom have become shareholders in ABG in return for handing over control of their brand.
Since Authentic paid $269m for a majority stake in Beckham’s brand management vehicle DB Ventures in 2022, the pair have been frequently spotted together, including on a yacht trip to celebrate his wife Victoria’s recent 50th birthday.
“A true friendship, the best family values and the hardest working person – next to me of course,” a post from Salter posted on David’s birthday in May read.
Yet, industry sources claim there is disquiet in the Beckham camp over Salter’s attempts to quickly monetise “Brand Beckham”.
“We see significant opportunities to scale his brand and expand it into new verticals,” Salter said when he took control of DB Ventures.
Beckham’s marketing power is such that past endorsements include brand giants such as Adidas, Gillette, Pepsi and Emporio Armani.
However, under Salter’s guidance, he has also become the face of Tempur mattresses, SharkNinja air fryers and AliExpress – a Chinese version of Amazon.
The ultimate test of what Salter has built may come with his next attempt to cash in on Authentic’s growth. With some investors keen to exit, Salter has his eyes on a stock market float but plans for a listing have been pulled twice before.
It is understood he has also been over to the Middle East as part of efforts to raise money from sovereign wealth funds. A third attempt at a listing is slated for 2026 but could that be scuppered too if Ted Baker turns out to be a harbinger of further costly tribulations?
With plans to diversify into beauty and children’s brands, as well as conquer international markets in Latin America, Asia and the Middle East, Authentic increasingly resembles a sprawling conglomerate, and as one turnaround consultant points out: “The risk with any conglomerate is that they end up toppling under their own weight.”
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