Happy Sunday!

I hope you’re sitting back, relaxed, with your feet up, and a beverage in your right hand. Today, I’ve got the new Chamberlain Coffee cans, which you can find at any Walmart! There’s nothing cooler than working on a brand and then seeing it in a national retailer.

With the recent acquisitions of Billabong and Quicksilver by Authentic Brands Group, Bed Bath and Beyond by Overstock, Capri Holdings (Which held Versace, Jimmy Choo, and Michael Kors) by Tapestry Brands and more, I have been thinking a lot about what makes for a multi-generational brand that can be traded over and over and over again by holding companies, conglomerates and PE firms over the years. That’s what today’s email is going to be about. Less tactics… more commentary to hopefully inspire a thought of how you can build a generational brand.

Before we get into it, have you heard the latest episode of Limited Supply? We’ve been getting so much positive feedback for the new format with themed episodes, each week. Here’s a quick rundown of all our recent episodes:

  • Episode 1: 3PLs, Supply Chain, Logistics
  • Episode 2: Black Friday, Cyber Monday Tactics
  • Episode 3: Current Events (iOS 17 changes, Allbirds, Amazon, etc)
  • Episode 4 (this coming week): Q&A from our Slack community

One of the greatest benefits of co-hosting Limited Supply with Moiz, is we get insights into each others ways of thinking. If I go back to the beginning of Limited Supply, most of my conversation was pure tactics. But 5 seasons in, I feel like I have a better balane of tactics, current events, publicly traded companies, M&A in the space, and more.

As we talk about public comps for DTC brands or even the M&A landscape, one question that always inspires me, is, how does a company become the next Juicy Couture, or Revlon, or Forever 21. A brand name that has the strength in its DNA to be resurrected and, when runwell, has the ability to make an amazing comeback. Today, I wanted to spend some time and dive into that. I’m not sure that I’ll get to the absolute answer, but as I write, I think I’ll uncover some ways to get there.

I have a thesis… Over the next few years, we’re going to see a lot of smart M&A departments and notable PE firms look to buy distressed assets in order to revive underperforming or nostalgic brands. I think these businesses fall into three main categories:  

1. Brands that are bankrupt or severely underperforming.

Think: 

2. Nostalgic IPs that are not living up to their full potential.

Think: 

  • Starter Jackets
  • Juicy Couture
  • Laffy Taffy 
  • G-Star

3. Modern brands that underperformed post IPO.

Think:

Obviously it’s much easier said than done to buy and revive these brands, but I think the right operators could do it and recapture some of the lost revenues, market share, and enterprise value that once existed but has now been dramatically reduced. 

For the modern brands that underperformed post IPO, there seems to be an even more compelling story. 

Some of these brands’ revenues have actually increased, while their market caps have fallen by 90%+ during the same time period. I’m no Wall Street expert, but my guess is that analysts on Wall Street love predictable, boring revenue — not based on the fluctuations of Meta, trends, or things that really fall under the “Want” category vs the Need category. FIGS used to be the darling IPO from DTC, but even FIGS is having a tough time.

For example, in 2021, Allbirds was valued at over 4 billion post IPO. 

The strange part? Their revenues have actually increased while their market cap went down. 

2021 net revenue? $277M 

2022 net revenue? $297.8M (up 7% from 2021 and up 36% compared to 2020)

Stock decline during the same period? About 90% (It’s currently down 93.85% since IPO) 

That’s a loss of over 3.5BN in market cap in roughly 24 months with 7% better revenues. It’s currently trading at a $200M market cap. Significantly less than their 2022 revenues. 

Seems like a good opportunity for a turnaround to me. 

Obviously these high-level metrics don’t tell the full story but I think there are a bunch of brands who are struggling right now in the public and private markets who are ripe for new management to come in and help revitalize the company and IP. 

When I look at these potential brands (I’ll list some out further below), I ask myself what do they have in common? From my POV, it’s:

  • Cultural tie-in
  • Convenient to the customer
  • Omnipresent distribution
  • The “cool kids” repped it
  • Innovative product or formulation

As Long Wknd gets closer to it’s relaunch in September, I am constantly thinking about what we can do to set us up for success. Success, in my eyes, is building a brand that is desired by a strategic, not that we are building it to sell, but I want to build a Rolex of a brand — tight, known well, durable, stands for something. 

Here are the 3 things I think that the brands mentioned above did well, that I think create the opportunity for a re-tradable brand:

Nail Distribution In Your Day & Age

The most important thing that you can do if you want to have a shot at becoming a long-term, successful brand that has the potential to be bought and sold over and over again is to nail distribution in your day and age. In my past emails, I’ve said “Your ad creative needs to be contextually relevant to the platform you’re advertising in.” Similarly, here, your distribution needs to be relevant to the time and age that you’re selling in.

When I think about the iconic brands that were succeeding when I was growing up, I think about companies like Foot Locker, Juicy Couture, Forever 21, American Apparel, Abercrombie and Fitch, Aeropostale, PacSun, Starter Jackets, Spencers, and more. 

For all of these brands, where would you most likely shop for them? The answer? Malls. 

I think in part, the reason why these brands succeeded is because they understood “the distribution of their time.” In the late 90s and early 2000s, the distribution that really mattered, aka the one that actually drove sales wasn’t TV or radio (although they played a part), it was the 5-10 year lease contracts inside of malls. If you owned the store/shelf-space in malls across the country, you could own a meaningful percentage of market share within your specific category (like youth apparel in the case of Abercrombie and Fitch). You could say getting marketing share was way easier back then, versus now, though physical retail and a 10 year lease probably cam with their own set of problems and competition. 

It wasn’t so much about the clothing itself, but the distribution. Ambercrombie and Fitch or Aeropastele were simply the brands that were available in the mall, so that’s what you bought! 

Today’s equivalent of owning store/shelf space in the “global mall” is owning relevant distribution channels on the internet. Now, instead of signing 5 year contracts with mall developers, you’re investing in content and ad-networks to build your own DTC distribution for your brand. 

The modern distribution you must invest in now is on Google, Meta, Instagram, TikTok, Snap, Pinterest, YouTube, Amazon, email, and SMS. If you get past that, then Walmart, Target, and Costco.

Without these, you simply can’t compete. The demand is still there, but the “malls” have changed.

Native Deodorant, AESOP, Hu Chocolate, and others all found their strides in modern-day distribution, which led them to acquisition. 

Nail Your Branding & Create an Emotional Connection

When I say Abercrombie and Fitch or Quicksilver, or Juicy Couture, I’m pretty sure that you can immediately picture the ads, the products, the storefronts, and the brands. 

These retail 1.0 giants paved the way and gave us all the playbook regarding what really matters when it comes to building an evergreen brand. 

For example, look at Juicy Couture. 

They had an:

  • Iconic visual identity 
  • An inherently viral WoM product line by putting the word “Juicy” all over their clothes. 
  • A fun in-store experience that was ahead of its time.
  • And enough product innovation (think about those classic 2-piece tracksuits in vibrant colors like pink, purple and green that they popularized) to build a truly memorable retail brand. 

To a certain consumer cohort, wearing Juicy Couture made you cool just by wearing the clothes. 

By putting on the tracksuit, you got to align yourself with countless celebrities including Kim K, Beyonce, Paris Hilton, J Lo, Brittany Spears, Mariah Carrey, Jessica Alba, Nicki Minaj, Kylie Jenner, Vanessa Hudgens, and more who all wore Juicy throughout the years. 

They made a simple tracksuit into a status symbol and a lifestyle, all encapsulated into the Juicy brand. 

I think having one killer product like the Juicy tracksuits that truly penetrates culture at a mass scale, means you’ll always have a chance to revive it as a multi-generational brand.

Kate Spade was another brand that did this well. All the cool girls had the Kate Spade bags, phone cases, and shoes. Whether or not you feel it’s just as hot now, the Kate Spade brand name was branded into our minds as an iconic brand. Today, Kate Spade, under Tapestry’s leadership, generated close to $1.5B in revenue and has a global presence. Coach, another Tapestry brand, was bought for under $600M, and last year posted over $6B in revenue.

The next generation of PE firms will likely model the saaviness and business acumen of Tapestry. 

The Lindy Effect & Scale 

The Lindy effect is an interesting phenomenon that basically says, the older something is, the longer it will continue to exist over time. I do think that there's a tipping point that has to do with both time in the market, and reaching a certain scale, where once you cross it, you are bound to have generational name recognition as a brand.

From the new class of DNVB’s, I think brands like Hint Water, Glossier, Warby Parker, Harry’s, Native, etc have all crossed this cultural chasm. They’ve been around long enough and hit a certain mass scale, that I can’t see a future 20 years from now, where consumers don’t remember or know what these brands are. 

Even if there’s a period where they struggle, I think all of these brands can always be acquired, revived and put on a brighter path.

The same goes for older, more nostalgic brands. How many of these brands are crushing it today?

  • JC Penny 
  • John Varvatos 
  • True Religion 
  • Serta Beds 
  • G-Star
  • L’Occitane
  • Laffy Taffy 
  • Lord and Taylor 
  • Sur La Table 

How many of these brands have household name recognition in the US and how many (with the right capital and team) do you think could be revived and crush it again? I think nearly all. 

Despite their performance today, many benefit from the Lindy effect where they’ve crossed the cultural chasm over the last 25-30 years which made them all household names. If your brand can reach scale and be relevant for just one 5-year period in its history, it will be able to be re-traded over and over again. The secret to this is time, trust, quality, and good customer experience. 

If you’re on this path, keep going.

Ok, I hope that inspired a thought in your head of how you’ll enhance your business. Let’s move on to some fun stuff…

Vendor of the Week:

OpenStore — The largest holding company of Shopify brands is now turning their saaviness into a service with OpenStore Boost.

In 2022, Miguel, was making $1M/year with his DTC brand, Jack Archer. He sold it for just under $1M to OpenStore, and within 9 months, the brand was on track to do $10M in revenue. OpenStore’s team did a number of things that worked:

  • They launched new products with R&D
  • They built out a mobile-app for their most loyal customers
  • They tested 600+ variations of ad creative

It was so successful, that OpenStore is now rolling out a new way to work with OpenStore, without selling your business. It’s called → OpenStore Boost.

With OpenStore Boost, you join a cohort of brands for a 10-week program to drive as much growth as possible. OpenStore will even build you an iOS app just for applying and qualifying (even if you don’t end up joining). I mean… why wouldn’t you apply? There’s no risk to applying!


If you’re interested to learn more about OpenStore Boost, click here to EasyApply.

LP of the Week:

This week’s LP of the Week is one that is special to me. I’ve gotten to know the founder of Do Amore, Krish, over the last few years through his replies to the newsletter and helping point him in the right direction for agencies, partners, etc. So I was incredibly excited when he decided to work with HOOX to build a landing page!

CLICK HERE TO SEE THE PAGE!

The landing page does a phenomenal job of countering objections. What if I don’t know the right size? We have a content module to answer that. Will she like it? Is there any reason she might not? We have answers to that. What about other guys who went through the process… how did it turn out for them? We have that. This is what we call a click-through style landing page — we sell the benefits and punchline of the brand, while countering objections, and then take you to the main product page to complete the purchase.

We just started running our HOOX Black Friday special — we’re reducing the cost to get a page developed with us, and even offering CRO on the Pro and Elite packages. Check out the packages on this page.

Once you purchase your page, our team spends 5-6 hours on research and angle development — what we think will have the highest impact on conversion. Then we wireframe and copy-write your page, show it to you for approval. Then we handle UI design and development, and run it by you for QA. Within 4 weeks, you have a beautiful looking landing page, and if you’re smart, you’ll duplicate your HOOX landing pages, and make 15-20 additional landing pages with our page as a template.


Book a time with me to see if we can build you a landing page. Or, just reply to this email with the word “Examples” and I’ll send you some of our best performing landing page examples.

That's all for this week

I hope today’s newsletter was still a fun thought-starter, even though it wasn’t necessarily a tactical deep-dive. Today’s topic is something I always think about… it’s the X factor for brands, really.

If my schedule is any indicator of it, it feels like we’re starting to get into the thick of Q3 and Q4 — busier calendars, more meetings, more inbound clients for Sharma Brands, and less time for “fun”. Make sure you take care of yourself — stay hydrated, get exercise, get those 9 hours of sleep, and watch some comedy without getting offended.

BTW, a pro-tip as you get into the thick of Q3 — you need to have a top-tier desk setup. Niv at Shrug VC just sent me the most epic desk mat (see here). It’s like I get distracted, then read a quote, and I’m focused again. Grab one here for $19!

I’ll see you next Sunday, same time, same place. If there’s anything I can help you with, don’t hesitate to reply to this email. I get pumped to see your replies, even if it’s just an emoji.

See ya!