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  • Nick Monjo

ABG Restricts Naked’s Use Of Frederick’s Label

Naked Brand Group just signed a renewal licensing agreement for Frederick’s of Hollywood that significantly restricts its use of the name. At the same time it is known that label owner Authentic Brand Group (ABG) has recently discussed wholesale use of the FOH license with many other companies.

Bendon Limited (which later merged with Naked and took over its name) obtained its original FOH license agreement with ABG in the summer of 2015.

As filed with the SEC, the new agreement “amends and restates in its entirety” the original license agreement. and now restricts the usage by Naked to “the United States, Australia, and New Zealand, through the Frederick’s of Hollywood website and through retail channels owned and/or operated by FOH and its affiliates, including the company’s other wholly owned subsidiary, Bendon Limited.” There are no Frederick’s of Hollywood brick and mortar stores currently. Bendon operates about 60 shops and outlets in Australia and New Zealand.

The new agreement covers various lingerie and swim products and states, that “during the term, licensee shall not be permitted to sell the licensed products at wholesale in the territory under this agreement or otherwise, unless expressly approved in advance by licensor in writing in each instance.”

When ABG originally bought the rights to Frederick’s of Hollywood, after that company went into bankruptcy in 2015, it announced plans to “launch a new brand vision” for for the label, adding that in addition to maintaining a website it planned to offer the brand in other retail channels, “expand product categories and drive distribution across department stores and specialty retailers in key markets including North America, Europe, Asia, South America and Latin America.”

One reason ABG has been reaching out to other potential licensees may be disappointment with Naked’s decling results for FOH in recent years. On April 30, Naked estimated sales of Frederick’s products for the year ended January 31, 2020 would be between $16.5 million and 17.5 million. But back in November 2018 Naked had stated, “the Frederick’s of Hollywood e-commerce business generated net sales of approximately $20.0 million for the trailing twelve months ended June 30, 2018,” and added, “management expects the Frederick’s of Hollywood e-commerce business to generate $25.0 million in revenue for the fiscal year ended January 31, 2019.”

In addition, it its annual report for the year ended January 31, 2020, Naked revealed that its overall “e-commerce revenue” over the past three years slid from a high of about $19.6 million (at todays exchange rates) in its fiscal 2018, down to about $19.4 million in its fiscal 2020. More significantly, Naked revealed it has been losing money on e-commerce. “For the 12-months ended January 31, 2020, e-commerce EBITDA was a loss of $2.6m (about $1.6 million) compared with a loss of $0.4m for the 12-months ended January 31, 2019. The loss for this period was impacted by increase in operating costs in this sector.”

Naked CEO Anna Johnson put a positive spin on the new Frederick’s of Hollywood license restrictions. “After discussions as to how to best strengthen our partnership with ABG coming out of this amended licensing agreement, we determined that our core IP and talent would continue to focus on the United States, Australian and New Zealand markets. We look forward to welcoming other partners to drive exciting new wholesale relationships with a global reach, enabling the brand to reach more of our consumer’s closets.” — NM

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