Footwear licensee Titan Industries Inc. has lived up to its name for the past 20 years, attracting deals with apparel brands like Joe’s Jeans and Betsey Johnson while also helping celebrities Gwen Stefani and Zendaya launch footwear lines.
Now the Huntington Beach-based company is ready to stake its claim as a retailer with plans to open three Badgley Mischka stores this year. It also doubled the size of its headquarters, moving into a nearby 84,754-square-foot space last month.
Titan’s recent growth is linked to its acquisition of luxury label Badgley Mischka two years ago in partnership with founders Mark Badgley and James Mischka, as well as New York-based apparel licensee MJCLK LLC, for $16 million from Iconix Brand Group.
Titan Chief Executive and co-founder Joe Ouaknine said it purchased the brand initially to protect its more than 10-year licensing deal.
“When [Iconix] put the company up for sale, of course I wasn’t interested, but when I spoke to prospective buyers, no one would guarantee me that they were going to keep me as a licensee,” he said. “So I took the law into my own hands, and I outbid everybody. And I paid $2 million more to get it.”
It’s an uncommon move for a footwear licensee to acquire its partner and move into retail, especially at a time when other retailers are fighting reduced traffic and slumping sales, shuttering stores and selling assets.
James Dion, founder and president of Chicago-based retail consulting firm Dionco Inc., said that even though Titan’s deal is unusual it could boost its bottom line.
“The profit margins are substantially better, because they’re not paying that licensing fee,” he said. “They’re not paying the people who are managing the original brand. They’re getting direct (profits).”
Dion said licensers can charge firms fees as high as $5,000 per item, though most are a percentage of the product’s wholesale or retail price.
For Ouaknine, the chance to acquire Badgley opened up an opportunity to aggressively expand the label’s footprint.
“I feel we are over-exposed online and not enough in brick-and-mortar,” he said. “I need to give the consumer more opportunities to buy the product. I’m doing it for the convenience of the consumer, not because my agenda is to become a retail guru.”
New Look
Titan hasn’t wasted time working with Badgley Mischka’s co-founders to develop a new strategy.
The company is nearing a deal to open its first footwear and accessories store at the Forum Shops at Caesars in Las Vegas. The brand currently operates a flagship store in Beverly Hills.
It introduced a men’s shoe line, partnered with licensee Synclaire Brands for children’s shoes, and hit retailers this year.
Footwear isn’t the only growth area. Badgley Mischka debuted its first sportswear collection last week, and Ouaknine said the apparel category could generate $20 million in annual sales within two years.
The 30-year-old luxury label is known for its red-carpet looks, and dresses a long list of celebrities and high-profile women, such as Helen Mirren, Taylor Swift, Oprah and Megyn Kelly.
Its footwear collections cover a range of styles that include evening and bridal. Prices are from $79 to $325.
Ouaknine said that though it’s introducing new product offerings for Badgley Mischka, most of the items are licensed, such as the recently launched Badgley Mischka Home.
He said the idea is for Titan to focus on what it does best—shoes. Plus, it’s the category that’s experienced consistent growth for the brand.
“We are shoe people,” he said. “Anytime we try to do something outside of the shoe business, we fall on our face.”
Perfect Fit
Ouaknine said he knew shoes were his calling after his first job while attending the University of Concordia in Montreal in the mid-1970s. It was at a shoe store.
“The first customer I ever helped gave me a two dollar tip,” he said. “I went back to the stockroom with my co-workers and said, ‘Wow, I didn’t know they tip.’ They said, ‘No, customers don’t (tip).’ So I knew that was a sign I was going to be in the shoe business.”
He went on to join Charles David, helping to bring the Canadian footwear label to the U.S. After its merger with GUESS Inc., he took the first vice president of sales role at Charles David and GUESS footwear.
Ouaknine stayed with the company for 13 years before launching Titan with co-founder Sal Palermo in 1998.
Palermo retired several years ago and is no longer involved with the company.
Titan has a staff of 50, and Ouaknine is its majority shareholder. He declined to state revenue.
Titan’s weathered a number of storms, including celebrity partnerships that failed to take off, hacked accounts, and a $3.5 million write-off after a brand failed to pay.
Beth Goldstein, fashion footwear and accessories analyst at NPD Group, said the footwear market is tough and extremely fragmented.
“In performance athletic footwear, the top five brands generate about 80% of the sales. In fashion footwear, it takes around 70 brands to do this, and there are hundreds, even thousands more,” she said. “So there are many, many brands fighting for (market) share.”
Dion also pointed out that Titan could find itself in a bind, should it choose to pursue more licensing deals.
“It could be an issue with the possibility of accusations of copying and not pushing one brand as hard as the other,” he said. “It’s not easy for a licensee to have competitive brands under one roof.”
Ouaknine acknowledged that the brand has carried many licenses but said it’s now focused on Badgley Mischka. The only independent label under its roof is women’s casual-apparel company Splendid.
“There’s not a week that goes by where a licensing opportunity comes up or a private-label opportunity comes up, but (we) don’t do it.”
