Countless celebrities have tried and failed miserably to strike gold in the retail licensing business. Against all odds, Jessica Simpson struck maybe the biggest gold windfall of them all with her licensing company The Jessica Simpson Collection.
We have previously reported on Jessica Simpson's retail empire and the fact that she reacquired 100% ownership rights in November. But thanks to an in-depth interview that was just published by Bloomberg, we now know a lot more about the brand's nitty gritty financial details, from inception to sale to re-acquisition. And the nitty gritty financial details are even more impressive than we previously knew.
Not only did Jessica create a brand that eventually generated over $1 billion in annual gross revenue, she also cashed out for a big payday… then re-acquired the brand out of bankruptcy in a corporate maneuver that would impress Gordon Gecko…
(Photo by Evan Agostini/Getty Images)
Brand Origins
Back in the spring of 2005 Jessica Simpson was at the peak of career. Actually, she was at the peak of her FIRST career. She may not have even realized it at the time, but she was actually at step one of what would eventually be a much more impressive and lucrative SECOND career as a retail mogul.
On March 30, 2005, Jessica's three-season smash-hit reality show, "Newlyweds: Nick and Jessica," aired its final episode. At the same time she was putting the final touches on what would soon be a critically-acclaimed turn in the film reboot of "The Dukes of Hazzard."
In the movie, Jessica took on the iconic role of Daisy Duke which had been made famous by Catherine Bach on the 1970s/1980s TV show. Thanks largely to a poster of Catherine (as Daisy) wearing super short jean shorts that sold over 5 million prints, short denim shorts became forever re-named as "Daisy Dukes."
As the film's summer release date approached, Jessica and her mother/manager, Tina Simpson, began to take meetings with various merchandising companies to entertain partnership offers to launch a Jessica Simpson retail business.
The resulting business was called…
The Jessica Simpson Collection
The merchandising company Jessica and Tina chose to work with was the Camuto Group.
The Camuto Group was founded in 2001 by Vince Camuto. Vince earned his first major fortune as the co-founder of retail conglomerate Nine West, which he sold in 1999 for $900 million. In 2001 he launched the Camuto Group which positioned itself as experts in manufacturing shoes for other brands.
For example, when Tory Burch, Lucky Brands and BCBG wanted to launch a line of shoes without actually having to make shoes, they tapped the Camuto Group. When Tory Burch had a huge hit with a $200 flat (which was a quarter of the price of similar rival flats), they were manufactured by the Camuto Group.
Jessica and Tina were impressed with the Camuto Group and hit it off with Vince. So a deal was struck where the Camuto Group would pay Jessica a fee to be the master licensee of her name on retail items. Vince also struck a side deal to acquire 25% of Jessica's brand outright.
You might assume, considering the movie's release, that the first product they made together was a line of Daisy Dukes, but Jessica actually wanted the first product to be a line of high-heeled cowboy boots. That's partially why she wanted to work with Camuto specifically.
Billion Dollar Brand
The high-heeled boot was a huge success and new products were quickly rolled out. Not just shoes either. The Jessica Simpson Collection eventually produced jeans, accessories, lingerie, perfume and more. Simpson and Camuto worked closely to oversee licensing deals on products in more than 30 retail categories.
(McCarthy/Getty Images for Jessica Simpson Collection)
According to the recent Bloomberg article, in 2010 the Jessica Simpson Collection generated $750 million in gross retail sales.
In 2014, the brand's peak year (so far), the Jessica Simpson Collection grossed over…
$1 billion
Before you get too excited, Jessica's cut of those gross revenues was actually not all that impressive. The retail business is tough, with notoriously low margins. According to Bloomberg, in the year the brand grossed $1 billion, Jessica's cut was just $13 million. An impressive number for sure, but technically that's 1.13% of gross revenue.
Selling Out
Unfortunately, Vince Camuto died in January 2015 after a battle with cancer. That left Tina and Jessica feeling aimless and needing a new partner. So, in April of that year, Jessica sold 62% of their empire to a company called Sequential Brands for $117 million. Vince Camuto's widow remained 25% owner and Jessica continued to own 12.5%.
With the sale, Jessica shrewdly included what would later prove to be an extremely brilliant deal point in her contract with Sequential. The contract required Sequential to give Jessica final approval rights over any potential acquirers if her brand was ever up for sale.
Sequential Bankruptcy
On the heels of their Jessica Simpson acquisition, Sequential went on a multi-billion dollar debt-funded brand buying spree. That strategy was all well and good… until it wasn't.
Here's what happened to Sequential's stock price as Wall Street soured on its acquisition strategy… and then as revenues were decimated by COVID-19:
Sequential filed for bankruptcy in February of 2021. At this point the company, with a bankruptcy judge overseeing, began to seek offers for its various assets and brands.
Just as the vultures began circling, Jessica and her mom met with an investment bank to put together an offer of their own. An offer that would result in Jessica regaining 100% ownership of her brand, name and license.
Their offer consisted of $65 million in cash, mostly funded by Jessica PERSONALLY.
But here's the best part – Jessica had a trump card in the negotiations.
Thanks to that deal point in her original contract, Jessica had the right to approve or deny any sale. That essentially made Jessica's offer the only viable offer that Sequential could even consider.
In August of 2021, Jessica's offer was submitted. Two months later it was officially accepted and consummated.
According to numbers reported by Bloomberg, even as Sequential imploded in 2020 and 2021, the Jessica Simpson Collection still managed to generated $500 million in gross retail sales last year. So it's by no means a dead brand.
What Happens Next?
I think the really interesting aspect of this story will happen over the coming years. Jessica previously earned just $13 million when her brand generated $1 billion in revenue. As 100% owner she'll get 100% of the profits from now on.
Let's say she builds the brand back up to $1 billion in sales and maintains an industry-standard 20% profit margin. That would be $200 million in profits for Jessica every year. Considering how far she's come so far, I wouldn't bet against it!
