Madonna recently announced a partnership with Iconix Brand Group (ICON) to bring a line of footwear and apparel to the retail marketplace. Iconix is the brains behind brands Joe Boxer, Mudd, Mosimo and Candie’s, so it knows a thing or two about connecting with consumers. Macy’s (M) is reportedly ready to announce a deal with the queen of pop to sell her wares.
But how easy is it hang the success or failure of a whole product line on the reputation of just one person? As the Tiger Woods scandal showed us, the world can come crashing to a halt pretty quickly when a top spokesman stumbles. However, here are five star brands that seem to be doing just fine after hanging their brand, reputation and financial future on a single person who sometimes doesn’t always come out smelling like roses.
Estee Lauder Companies (EL): Estee Lauder was the only woman on Time’s 1998 list of the 20 most influential business geniuses of the 20th century, but her place on the list can’t be questioned. The cosmetics and fashion icon started helping her uncle sell cold creams and other products he made in his lab in the late 1920s and launched her business at an unusual time — during the Great Depression — and built it up to become a household brand. Explaining her success, she said, “I have never worked a day in my life without selling. If I believe in something, I sell it, and I sell it hard.” EL went public in 1994, and though its namesake founder passed away in 2004 at the ripe old age of 97, the company has been doing very well in recent years. EL shares are actually trading above their 2008 peak, and have nearly tripled since their low in March 2009.
Martha Stewart Omimedia (MSO): Martha Stewart’s magazine and television programming along with branded home goods and merchandise fuel the profits of this company. Though the scandal that surrounded Martha over insider trading of ImClone (IMCL) stock from 2001 to 2004 weighed on shares, the company’s stock soared after her 5-month incarceration. More recent troubles were tied to the bottom line, with MSO struggling to make a profit in 2009. However, Martha Stewart’s namesake company reported a profit for the fourth quarter, reversing a year-ago loss thanks to $10 million in deferred royalties from Kmart.
Polo Ralph Lauren (RL): The iconic clothing brand most recently was on display in the Winter Olympics in Vancouver, with RL as a key sponsor. But the brand got its start in 1940s New York when a young Lauren – then going by his given Jewish name of Ralph Rueben Lifshitz — sold ties to his schoolmates. Ralph Lauren released Polo’s famous short sleeve mesh shirt with the Polo logo in 1972 and never looked back, going public in 1997. Stock of RL has performed well in the past 13 years, rising steadily right up until the financial crisis pushed shares all the way down to around $35 in March of 2009. The company has almost tripled in share value since then due to four consecutive quarters of topping Wall Street earnings targets.
Trump Entertainment Resorts (TRMPQ): Imagine you name not just a company after yourself, but most of its properties. Now imagine that when that company can’t pay its bills, you have to give up half of your ownership stake in the buildings that bear your name and remain as the boss without drawing a penny in salary. That was the situation for Donald Trump in the early 1990s, when he saw his Trump Plaza Hotel plunge into bankruptcy thanks to massive debt. But the Donald wasn’t down and out for long. Unbowed, he combined his casino holdings and went public with his company in 1995. Despite seeing shares rise nicely in the first year or so to a peak of $35, by 1998 TRMP had fallen into single digits as the company failed to turn a profit. Trump once again took a haircut – his individual ownership stake was reduced from 56% to just 27%, and he was pushed out as CEO as the company filed for bankruptcy in 2004. The stock now trades as a pink-sheet penny stock.
Wynn Resorts (WYNN): Like Trump, Steve Wynn made his fortune in property and casinos. His father Michael Weinberg ran bingo parlors in the eastern U.S., and Wynn did well enough to provide for a seed investment in a burgeoning Las Vegas casino in the late 1960s. He went on to build icons of “the strip” in Vegas, including The Mirage, Treasure Island and Bellagio. The Mirage was sold to MGM Grand Inc. for $6.6 billion in June 2000 to form the current MGM Mirage (MGM) business. While Wynn resorts took a tumble in 2009, falling to a low of under $20 a share, it has returned to profitablility in recent quarters and shares are up about four-fold from the lows.
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