Hi, and welcome to Line Sheet. My (responsible, progressive, sunblock-muted) tan is coming along nicely. Yours?

Meanwhile, beauty M&A queen Rachel Strugatz is back on the scene with an update on those fast-growing makeup and skincare brands that started engaging bankers earlier this year. After several months without any notable exits, things are picking up, and Rachel has can’t-get-anywhere-else details on the latest handshakes, plus a preview of what’s next. I’ve also got some intel on that 🥐 popping up in your fashion newsletters, an explanation of what the blockbuster Prada earnings actually say about the company (and the industry), and more department store news that’s really gonna make you think.

P.S., as you settle into your two-week (or more) holiday, I encourage you to catch up on some of the special stuff that Rachel and I have been sending out these past few months. Our obsessions include, but are certainly not limited to: Hedi Slimane, the Chanel job, LVMH, Kering, Sweet Baby Jamie, Estée Lauder, Vennette Ho, falling into The Gap, anyone who was at the G9 Summit (but especially Katherine Power), James Jebbia’s desire to be left alone, and Travis Kelce. (Although now that I’ve seen older brother Jason in a beret, he is gaining ground, too.) Sign up to read up! I love you!

Mentioned in this issue: Miu Miu, Prada, Summer Fridays, Vennette Ho, Osea, Patrick Starrr, One/Size, Rare Beauty, Winky Lux, Sephora, 🥐, Andrew Parietti, Andrew Keith, Selfridges, Leandra Medine, Courtney Grow, Laurel Pantin, Dôen, Ganni, and many more…

• More, more, Miu Miu, with a caveat: I don’t want to give too much away, but I just recorded an episode of Fashion People with Instagram’s O.G. fashion sourcer, Gab Waller (it’s running in a few weeks), and we ended up talking quite a bit about Miu Miu and why it continues hitting so hard with consumers. Prada reported yesterday that its baby sister brand’s retail sales—i.e., sales at stores owned directly by the brand—were up 95 percent in the first half of 2024. Wawaweewa!

  Miu Miu, which is almost definitely gonna surpass €1 billion in sales this year, only makes up 23 percent of Prada’s overall revenue. Gab alerted me to a rainbow crocheted-knit pouch with the Miu Miu logo sewn on the front, which has sold out two seasons in a row and retails for under $1,400 that sort of encapsulates why everyone is buying in. As Bernstein analyst Luca Solca said in his note, “Prada’s competitors increased entry prices significantly in the last five years, whereas [Prada and Miu Miu] were a little more commercial”—meaning that both brands didn’t jack up prices as outrageously as some competitors. (The price-value ratio is particularly appealing for tourists in Europe, where you benefit from the favorable exchange rate and a tax refund.)

  Prada and Miu Miu are the last remaining superbrands that fashion people want to buy, and that is their power. While I’m always ultra-cautious when a company experiences nutty growth—because, as we’ve seen with Gucci, what goes up must come down—the fact that the group remains underpenetrated in regions like the U.S. is very encouraging for investors. As I’ve said before, Prada and Miu Miu have to watch it with the logos (especially on clothes or simple accessories). Also: Prada’s handbags are nowhere near as coveted as the shoes or clothes. (And believe me, I want them to be. I think they know there is work to be done in that category.) All in all, though, another win for the indie brands, if you want to call them that.

  (By the way, I am still wondering what’s up with that long-anticipated Milan listing. No word from management.)

• What is Croissant and why is it all over the fashion Substacks?: A loyal Line Sheet reader messaged me the other day, requesting that I look into why “Croissant is paying all these newsletter influencers.” Indeed, I had noticed earlier in the day that Laura Reilly’s newsletter, Magasin, was sponsored by the secondary market retail Chrome plug-in—which, in the simplest terms, induces consumers to buy items by guaranteeing a secondary market price minimum if they eventually want to resell.

  For instance, if you bought this $4,250 trench coat from The Row via Ssense, Croissant promises to buy it back from you within the year for $1,449—a price that was generated by A.I. “Shop Now, Sell Later,” is the slogan. Once you sell it back to Croissant, you don’t have to worry about what happens to it; that’s Croissant’s problem. (Croissant, which has about 100 partners, does what everyone else does: They sell items on eBay, or Grailed, or The RealReal.)

  But it wasn’t just Laura talking up Croissant this past week: Leandra Medine, Courtney Grow, and Laurel Pantin are all in cahoots with the company, too. Max Stein, my friend and unofficial manager, reps everyone in that crew besides Laurel. (Delphine Del Val, my friend and unofficial life coach, reps her.) They both make a lot of money for their clients, so I am not surprised they extracted the goods from Croissant.

  Turns out, though, that the folks behind Croissant—which just brought its app out of beta—are also well-versed in this subset of fashion media and its consumer base. C.M.O. Andrew Parietti, known in some circles as A.P., is the long-lost co-founder of Outdoor Voices (technically Employee No. 1, but who’s counting), and gets written out of that epic narrative far too often. A.P. has done plenty since O.V., including founding a jewelry line called Homer. He understands the Fashion Substack scene, and why targeting those customers is so valuable for brand-building market fomentation. (He also knows Leandra and her husband, Abie Cohen, who were early Outdoor Voices investors.)

  I called Andrew up earlier this week to get a sense of what the heck he was doing. (He said he “had a feeling” he was going to hear from me.) Croissant, he told me, is trying to solve a very simple problem: It’s gotten harder for consumers to make decent money off of resale sites, and selling back to brands is laborious and annoying—a bad experience, as Gen Zers say these days. Guaranteeing a resale minimum lubricates the market and actually encourages them to spend upstream. For instance, if you tend to buy from Aritzia and J.Crew, you might opt for something from Ganni or Dôen instead.

  Croissant earns an affiliate commission on purchases made through retailers connected to their system (the rates vary, but it’s safe to say the commission is in the 5 to 10 percent range, and they will add new retailers by customer request). With some retailers, the partnership is direct, which means the option to opt in to Croissant is embedded into the check-out process.

  The pitch to retailers is that you’re going to encourage higher basket sizes if the customer knows they can get some money back. The pitch to investors is that resale is a growing and important part of the customer journey, but no one has figured out how to monetize it. (Croissant founder John Howard—no, not that one—raised $24 million in a seed round.) I’m skeptical that there is a path to profitability here, though, if only because managing physical product—the customer ships the item to Croissant and they handle it from there—is costly and very hard to scale. Also, I rarely resell things within a year of purchase. That said, I do buy the idea that people will spend more if they know they can make some of that money back sooner than later. Also, the name is very cute.

• No one is safe: Andrew Keith, the well-liked (right?) C.E.O. of London department store Selfridges, is leaving the company, as WWD reported yesterday. Sounds like Keith has a new job (hmm… there are a lot of possibilities about where he’s going…), but his departure reminded me that, at one point not very long ago, Selfridges was the gold standard in the business: a small store count (just four), a blended wholesale-commission business model (store buyers heavily influenced the concession buys), and an extremely fun product mix. In 2022, the Austrian real estate group Signa partnered with Thailand’s Central Group to acquire the Selfridges portfolio from the billionaire Canadian Weston clan for $5 billion.

  And yet, at the end of last year, Signa filed for insolvency in Austria, leaving Selfridges in a pickle. Saudi’s Public Investment Fund came to the rescue, but Selfridges is still having a difficult time making money. In the year ending January 31, 2023—the most recently available public numbers—Selfridges generated around $1 billion in revenue, but it lost about $34 million. Alas, Selfridges has been hurt by the slowdown in foreign tourism and the continued Brexit mess. Even when you do an objectively good job in this business, it’s not easy to stay in the black.

In the past week, at last, there’s been a swirl of activity involving Raymond James rainmaker Vennette Ho, the industry’s favorite banker, who has orchestrated two deals in the last few days. On the sell side, Ho found Summer Fridays a new majority owner in TSG Consumer Partners, which will take a sizable stake in the skincare brand co-founded by influencers Marianna Hewitt and Lauren Ireland. On the buy side, Ho guided Core Industrial Partners to acquire a majority stake in Winky Lux, a Gen Z brand that sells affordable makeup and skincare.

Osea may be attractive to Shiseido, in particular, because of its very clear brand positioning, with a hero ingredient—seaweed—found in every single product it makes. That plays especially well in the APAC region, where Shiseido sees a clear opportunity to expand the line “in its home market and beyond,” according to a person familiar with the strategy. Plus, Osea’s business is well-balanced, both between face and body products (each makes up half the business) and between distribution channels (direct-to-consumer revenue and Ulta sales also equal a roughly even split). What this brand lacks in sex appeal, it makes up for in stability. Osea has flown somewhat under the radar, but that’s exactly why Shiseido probably wants it.

Of course, Ho isn’t the only banker working the phones. I’ve also heard that influencer Patrick Starrr’s One/Size, which recently engaged The Sage Group to explore a sales process, has already gotten at least one bid. The brand’s business has quadrupled in the last two years and is on track to hit $115 million in revenue, according to the Business of Fashion, mostly due to its bestselling setting spray. I’m not surprised; Starrr is one of the most dynamic founders I’ve ever met. (A spokesperson for One/Size declined to comment.)

Over the last few months, prior to the TSG deal, there had been plenty of chatter about Summer Fridays pausing its sale process, as well as an “issue” with its lip products. But what really happened was that Summer Fridays sold so many of those damn lip butters that it completely turned the business and financial model upside down. “In Q1, the company started blowing it out of the water in a way that nobody could have anticipated,” said a person familiar with the process. “In the first couple of weeks, we all thought, ‘This is amazing, they’re going to crush the plan, this is going to be a great process’––and then they realized they were going to do the amount of EBITDA in Q1 that they thought they were going to do for the year.” Indeed, someone with knowledge of Sephora’s business told me that 70 to 80 percent of the brand’s sales at the retailer comes from its lip products, depending on launches and stock. I heard that lip launches continually break records on Sephora’s app.

This context explains why Ho led the brand’s co-founders to a majority investment from TSG, which could offer the duo a well-earned early liquidity event while helping them scale the lip business and priming Summer Fridays for a larger exit. Summer Fridays still has a huge amount of upside, and even more momentum now than it did in its earliest days—an impressive feat, especially for influencer-founders who typically struggle to sustain consumer interest after an initial wave of buzz. Much of the brand’s success is a credit to Hewitt, a shrewd business woman who’s been meticulous about creating and nurturing a millennial-first brand. She and Ireland have “retained a pretty significant stake in the business,” according to Ho, and I’m confident they will get that big exit in due time.

Until tomorrow,
Lauren