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Takeaway: Head Scratching Offer for MSO. Retail Sales Decelerate as Summer Compares Get Tougher.

SQBG, MSO - Head Scratching Offer for Martha Stewart Living by Sequential Brands


Takeaway: At these multiples, 3.3x 2015E EV/Sales and 24x 2015E EV/EBITDA, we're scratching our heads trying to figure out what Sequential Brands thinks its buying. What we see is a company almost 100% dependent on the legacy of a soon to be 74 year old founder and media personality that has been permanently damaged, at least in the eyes of potential licensing partners after the whole M/JCP debacle. The thinking at SQBG has to be that it can layer MSO on to its existing platform, use the brand name to generate royalty revenue, and generate enough cash flow to justify the deal price. But there is serious key employee risk associated with this deal not to mention the fact that the Martha brand name is less relevant than it was five years ago, but far more relevant than it is likely to be in 2020.

Retail Sales Decelerate in Week 1 of Difficult 15-Week Summer Comps Stretch

Takeaway: On a 2yr, basis sales accelerated sequentially against a 4.1% reading last year. But, on a 1yr sequential basis there was a meaningful 40bps deceleration equating to the lowest growth rate we've seen in 2015 YTD. And we'd expect more of the same as weekly sales growth rates come under added pressure through September as we comp against a solid Summer of 2014.

Retail Callouts (6/23): MSO/SQBG Deal,  Chain Store Sales Decelerating - 6 23 chart1

Retail Callouts (6/23): MSO/SQBG Deal,  Chain Store Sales Decelerating - 6 23 chart2


M - Macy’s, Inc. to Redeem 8.125% Senior Notes Due 2035


FL - FootLocker launches video promotion with Under Armour, NBA


W - Wayfair plays a different marketing tune


NKE - Nike Ad Salutes Cleveland Fans Despite NBA Championship Loss


Alibaba Sells 11 Main


MERS Outbreak Hits South Korean Retail