What Can You Learn From Lacoste's Brands Turnaround? Growth During a Downturn Is Possible
What Can You Learn From Lacoste's Brand Turnaround? Growth During a Downturn Is Possible
Lacoste's sales rose 26% year over year in the middle of a reprioritization of consumer spending that affected apparel the most. Its owner MF Brands is trying to replicate this success.
Is MF Brands a counter-story during difficult times? Warning: pursuing this strategy needs cash.
The WSJ has an article about the owner of Lacoste pursuing an acquisition strategy even during difficult times.
This strategy is similar to one pursued by WHP Global and Authentic Brands Group - find good brands in bad situations and "glow them up." Some firms operate the brands in-house, and some outsource the operations, but the strategy is still simple.
* Find a brand people know and at least _used to_ care about. Google searches are a good proxy.
* Expand internationally through partnerships.
* Add licensing partners in additional categories.
* Give the brand a digital heartbeat that it may have been missing before -- DTC, social, etc.
* Make smart use of retail.
What's that about the economy? Why does this plan work in any economy?
There are only a few simple ingredients, from what I gather:
* Buying low. This is the most important part and requires an accurate valuation process. In the past few years, deals would often get bid up too high. You need valuation conviction to walk away.
* Cash reserves. Cash creates opportunity, particularly in this environment, and gives you leverage to see new deals.
* Willingness to be patient and invest. Important, but not as much as buying low! Of course, the right kinds of investments matter.
Finally -- the point about Google searches is a killer. Over the past few years, sometimes I type in the hot new buzzy brand into Google Trends and compare it to the brand that no one seems to care about anymore, and find the older brand beats it ten to one!
That is what you call an opportunity for transformation.
