Madonna takes cue from Martha Stewart

Pop icon tries her hand at a branded retail line at Macy's ... though consumer spending woes may complicate things

By InvestorPlace Mar 12, 2010 8:38AM

retailJust imagine the newspaper ads: “Madonna brand cone bras at Macy’s (M) -- 20% off!”

 

At 51 years old, Madonna is apparently going to try her hand at fashion after putting her creativity to work in other forms for decades. And Iconix Brand Group (ICON) -- the trendy company that offers garments under brands Joe Boxer, Mudd and Candie’s -- is going to bring her goods to the market. And Macy’s is going to be the first store to carry the products.


But is a clothing line a good idea for Madonna in the current consumer spending environment?

 

The queen of pop music has proven she can connect with consumers, selling more than 200 million albums worldwide. She also has proven a successful actress in a range of films -- from her breakout 1985 performance in Desperately Seeking Susan to Dick Tracy in 1990 to Evita in 1996. So there’s no reason to think she won’t succeed at fashion, too.

 

That is, as long as she doesn’t do anything stupid. Tiger woods proved to us that a spokesperson’s antics can really damage brands. And Martha Stewart’s messy insider trading scandal that brutalized shares of her Martha Stewart Omnimedia (OMN) in 2001 to 2004 shows how shareholders can be punished by missteps of the brand’s caretaker. But Madonna has been around the block and should be savvy enough to not upset the apple cart. (Check out these five stocks that bear the name of one iconic spokesperson, and how they have fared with that branding.)

 

Iconix has formed a subsidiary known as MG Icon LLC, a joint venture to be owned 50% by Iconix and 50% by an entity controlled by Madonna and her longtime manager and business partner Guy Oseary. According to Iconix, “MG Icon has entered into an exclusive license and services agreement with Madonna allowing the use of Madonna's name and personality in connection with apparel, footwear and other products.”

 

And don’t think that this means Madonna will just be sitting on the sidelines allowing Iconix to run the show. According to the company, “Madonna has agreed to pro vide creative services in connection with the development and promotion of the venture's brands and opportunities.”

 

MG Icon will announce a Macy's direct-to-retail agreement very shortly, and we’ll no doubt get a glimpse at some of the first products within a few weeks. And the fact that Iconix brands have typically targeted trendy teens is a plus in these tough economic times -- since the one demographic that will never know weak consumer spending is teenage girls. But it remains to be seen if an aging pop superstar can really connect with this age group. And if ICON targets older shoppers, it’s not clear if Madonna’s face alone will be enough to drive sales in this crowded marketplace and an era of weak spending.

 

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