TRLG announced today that it has entered into a licensing agreement with InGroup, a leading product licensing firm. (Read the press release). This step is a logical one in the company's desire to expand the brand beyond premium denim. Lubell is a jeans expert and developing appropriate products in other fashion categories (e.g. fragrances, shoes, etc) means working with experts in these fields and this is what InGroup is expected to do.
What this means for shareholders of TRLG is that we have found another way to capitalize on the brand with little or no additional capital tied up in producing the products. I am not sure how this licensing arrangement will work exactly (will TRLG distribute or a 3rd party?) Gualberto has had some discussions with Charles Lesser, and the licensing is definately part of their 2007 strategy. The only real risk I see at this point is that of overexposure, but I consider this a remote possiblit at this time, at least not yet.
So, the evidence suggests that the licensing agreement is part of an overall corporate decision to grow rapidly, and with a minimum of capital investment. Given management's ability to deliver results thus far, I see this as very bullish. If we see any further weakness in the stock, I will look to add more stock to my position.
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