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| Hi, and welcome back to Line Sheet. Europe’s collective “out of office” is already up, so here’s hoping you’re reading this from the top of a mountain somewhere—or, if you’re one of those crazy people who likes sand, at the beach.
In today’s private email, you’ll find my Farfetch dissertation, a mini scoop on celebrity beauty brand news, updates from the worlds of both Yeezy and The RealReal, and some thoughts on that WWD hire. So much.
Finally, for those of you still sitting at a desk: Did you neglect to buy something for your long-suffering underlings? Remember that Puck is the perfect present. (Nobody wants more sugar right now, and Amex gift cards are a pain to redeem. And you’re gaining access to the inaccessible, and helping reinvent the business model of journalism. Plus: You can afford it, and you’re afraid of being publicly shamed if you don’t.) If you’re interested in setting up a corporate subscription, please email my guy Fritz@puck.news. Cheers!
Mentioned in this issue: José Neves, Farfetch, David Tourniaire-Beauciel, Gosha Rubchinskiy, Virgil Abloh, Yeezy, Eugenia Miranda Richman,
Kristina O’Neill, Ana Andjelic, Esprit, Ruth and Tom Chapman, Davide De Giglio and Andrea Grilli, Jay Penske, Bernard Arnault’s shopping spree, Anish Melwani, and Naomi Watts… |
| A MESSAGE FROM ESPRIT |
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| Known and beloved in the 80s, ESPRIT is an iconic lifestyle brand. Tapping into its innovative brand origins rooted in creativity, community and playfulness, ESPRIT relaunched in Fall 2023 with a confident and current aesthetic centered on its "rules don't apply" brand promise. This world aims to attract existing fans nostalgic for the brand as well as the young generation of consumers who are wearing ESPRIT-pioneered styles without even knowing it. ESPRIT's brand direction comes to life through mischievous communication, aspirational visual language, cutting-edge retail experiences and a new product direction that confidently mixes styles. |
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- The RealReal just hired a very famous bankruptcy lawyer: Um, maybe more on this later when I have more space and time, but I just wanted you to know that The RealReal announced last month that it has hired the boutique investment bank Moelis & Company and law firm Wachtell Lipton Rosen & Katz to help refinance its $450 million in convertible notes.
- In celebrity beauty brand news: Naomi Watts has bought the rights to her menopause-wellness brand, Stripes, which closed down after its parent company, the biotech firm-turned-consumer beauty group Amyris filed for bankruptcy in August. Watts paid $500,000 for it, according to court documents filed on Friday.The whole Amyris situation is just very goofy (you can read more about it on BoF), and they’re currently selling off all their brands: Queer Eye host Jonathan Van Ness’s haircare line sold for $1.25 million last week, while Rosie Huntington-Whiteley’s Rose Inc. probably the most famous of them all, sold for $2.5 million to Hong Kong-based AA Investment. Anyway, Watts was pretty smart to do something around menopause, the thing nobody talks about but happens to half of the population. Menopause is an increasingly hot investment area in venture capital, so maybe with a new partner she’ll be able to make back all the money she has spent and way more.
- Kanye-Gosha-Yeezus-Jesus: If you read the internet—or, alternatively, were at the Luna Luna opening in Los Angeles on Thursday night, alongside every human on earth who falls into the “creative class”—you may have heard that Kanye “Ye” West has hired Gosha Rubchinskiy, the Russian designer whose brand was once very cool and backed by Adrian Joffe and Comme des Garçons.Rubchinskiy got canceled a few years ago for I honestly can’t remember what, but whatever it was, people were not forgiving. West, who loves to overpay talent but may be having a harder time recruiting these days thanks to his own cancellation, has welcomed Rubchinskiy into the fold as Yeezy’s new head of design. Meanwhile, Yeezy dropped a new sock shoe, which conspiracy theorists online are noting is a specialty of David Tourniaire-Beauciel, whom I had heard was working with Yeezy. (When I asked, both Tourniaire-Beauciel and a rep for West vigorously denied that the famous shoe designer, best known for his work at Balenciaga, has done anything for Yeezy.) Shrug emoji!
- On WWD’s future: As I wrote last week, Women’s Wear Daily, the fashion industry’s 113-year-old paper of record, named Eugenia Miranda Richman editor-in-chief after a multiyear search. Richman currently runs SheKnows, another Penske Media-owned property that “helps empower women through articles and discussion related to parenting, women's health, family-friendly recipes, and relationship advice,” according to the website, and she’ll start in her new post in January. (A WWD spokesperson did not respond to my request for comment.)Many fashion-media types wrote to me a little baffled by this news. What in the world is SheKnows? Why didn’t they hire Nicole Phelps or Erik Maza? (Why, indeed!) Well, from what I know, Richman has done a very, very good job at search engine optimizing SheKnows, even turning a profit. I assume she is wonderful, and may be exactly what WWD needs; I’m not one to subscribe to the thinking that you have to be a well-worn fashion insider to infiltrate the industry and report on it properly. But… I understand why the industry is suspicious of the appointment.
WWD people hate when those who have never worked there (like me) bring up John Fairchild, the longtime publisher and editor-in-chief of the trade, but I’d say there’s not another fashion writer (except for Teri Agins) who has influenced me more. His book, 1989’s Chic Savages, is a dishy, bitchy memoir of his life covering the trade. It taught me a lot about how fashion works, and even though the industry has changed dramatically since its publication, so much of it still rings true. (Businesses change, but people don’t.)
When Fairchild was running it, WWD was super aggressive and often gossipy, but as the industry consolidated in the late 1990s and early 2000s, and the publication changed ownership several times, it became more of a traditional, bone-dry trade. There are still some great reporters there (my scoop king Miles Socha, Samantha Conti, and Booth Moore, among others), but it has no flair. Which is not their fault. If WWD wants to earn back its reputation as “the fashion bible,” as I understand it does, it’s going to need to be more fun and authoritative.
As I mentioned when I first covered this search back in April, it’s hard for me to write about WWD with complete objectivity, given that complete objectivity is total B.S., but also because I worked for a long time at WWD’s direct competitor, The Business of Fashion, which takes a more modern, slick, and in-depth approach to straightforward industry news. I still have a vested interest in BoF, and would like the company to sell, someday, when the timing is right, so that I can renovate my kitchen.
But all that aside, I have opinions, and my opinion is that Jay Penske is never going to pay as much attention to WWD as his four Hollywood trades, which generate a lot more revenue each year than WWD ever will. (He should have bought Fashionista.com—another place I used to work… hey, what happened to my equity there?—to gain a bigger foothold in the market. But while that made sense a decade ago, I’m not sure it makes sense anymore.) Anyway, I don’t know why I care, I suppose it’s because I like journalism.
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| A Bridge Too Farfetch |
| Assessing the collateral damage and lessons learned—particularly that “winner-takes-all” nonsense—from Farfetch’s humbling: the delisting, the bridge loan, and failed Yoox Net-a-Porter merger. |
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| On Monday, Farfetch, the luxury marketplace founded in 2008 by entrepreneur José Neves, got a new owner. E-commerce company Coupang, often called the Amazon of South Korea, gave Farfetch access to a $500 million bridge loan so that it could pay its bills and not go under. Farfetch, which stopped trading on the New York Stock Exchange on Friday, was once valued at as much as $23 billion. Today, insiders are calling it a “ghost ship,” and it’s unclear what will happen to its subsidiaries, including Off-White operator New Guards Group and department store Browns. The deal to buy competitor Yoox Net-a-Porter Group from Richemont has been terminated, making this a multiple-front disaster.It’s hard to explain precisely what went wrong at Farfetch not only because so many things went wrong, but also because its problems befell so many others, too. The market for selling luxury goods online exploded during the past decade, which led to rampant investment and a proliferation of businesses—followed by the gradual realization among these companies that they had overestimated how much of that market they could own. Many of these businesses were profitable and thriving at $200 million-$300 million a year in sales. Some even reached $500 million in annual revenue with relative ease. And yet that didn’t matter because most raised capital at unrealistic valuations, forcing growth at the detriment of everything else, to repay their investors and not go underwater.
The wreckage is everywhere, not unlike what hit adjacent industries like digital media or once ascendant D.T.C. companies like Casper and Allbirds. There’s YNAP, once the leader in the category, which was diminished by an ill-advised merger and terrible tech. There’s Matches, a competitor once valued at $1 billion by private equity firm Apax Partners, which is now rumored to be an acquisition target in the $50 million to $100 million range. And then there are the American department stores that compete in the space: Barneys New York was the first casualty, liquidating in 2019. Saks and Neiman Marcus Group—the latter of which announced a joint venture with Farfetch more than a year ago—are inching toward a near-inevitable merger.
As I made calls this past weekend, I pulled up some of my early coverage of Neves, dating back to 2013 and 2014. At the time, he was not as well known as Net-a-Porter founder Natalie Massenet, the category’s founder and de facto face. Massenet, after all, had been a fashion journalist, working at Women’s Wear Daily and assisting Isabella Blow at Tatler. Ruth and Tom Chapman, founders of Matches, were shopkeepers before they were internet entrepreneurs. Federico Marchetti was a management consultant before founding Yoox, the online outlet store, but he’d been around for far longer.
And yet, for many investors, Neves was still the easiest to bet on. Investors tend to view markets as either winner-takes-all (think Amazon in e-commerce), winner-takes-most (Uber in ride-sharing and logistics), or having lots of winners (all the categories they don’t want to invest in). Luxury e-commerce, to many, seemed to definitionally be a winner-take-all category, and Neves had the most street cred as an entrepreneur. While he didn’t have the fashion authority that Massenet or the Chapmans possessed, he was viewed as a tech insider who had also tried his hand at fashion with the trendy London-based shoe line Swear, known for its pointy white plimsoll, in the early aughts. What could possibly go wrong? |
| A MESSAGE FROM ESPRIT |
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| Known and beloved in the 80s, ESPRIT is an iconic lifestyle brand. Tapping into its innovative brand origins rooted in creativity, community and playfulness, ESPRIT relaunched in Fall 2023 with a confident and current aesthetic centered on its "rules don't apply" brand promise. This world aims to attract existing fans nostalgic for the brand as well as the young generation of consumers who are wearing ESPRIT-pioneered styles without even knowing it. ESPRIT's brand direction comes to life through mischievous communication, aspirational visual language, cutting-edge retail experiences and a new product direction that confidently mixes styles. |
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| When Neves started raising hundreds of millions of dollars—$1.7 billion by 2020, according to Crunchbase—Farfetch only operated the marketplace, a sensible business that erases inventory risk, lightens the logistical load, and becomes more profitable with scale. His main concerns were having enough of the right product on the site, and increasing brand awareness. To get ahead of the first problem, Farfetch would often front retailers the money to place bigger orders, indirectly participating in the wholesale process. As for the brand piece? Well, that never really righted itself. While Farfetch’s team was highly skilled at search engine marketing, the site never became a destination in the same way Net-a-Porter or Matches were.Blame the lack of cohesion—the best retailers have a strong, singular point of view—blame the extraordinary number of products for sale, but Farfetch has never been the first pitstop when browsing for luxury fashion. Amazon made itself indispensable to consumers. Its lack of brand became the brand. But Amazon succeeded because it served a practical purpose. Shopping online for things you would buy at drugstores, grocery stores, or big-box retailers saves time, and sometimes money. While Farfetch made it easier to access hard-to-find fashion items, its utility was limited.
And yet, Farfetch still made it easier for independent stores to sell online and turn over inventory more quickly. It would have been a fabulous $400 million-a-year-in-sales business. But like nearly all of his peers, Neves raised far too much money—Condé Nast International, Chanel, and JD.com were all investors. Along the way, he developed new concepts (remember The Store of the Future?) and acquired new companies in hopes of fueling growth. By 2019, when Farfetch bought New Guards Group (NGG)—the brand “accelerator” that operates Virgil Abloh’s Off-White label among other merch-y labels including Palm Angels—Farfetch had become increasingly reliant on inventory from brands that directly operated on the marketplace, not just third-party retailers. So along with independent boutiques selling their inventory through Farfetch.com, individual brands would also set up shops in the marketplace to help offload their own inventory.
When Neves explained it to me at the time, I could understand why he thought owning a manufacturer like NGG made sense. But even if Abloh hadn’t tragically passed away just two years later, the reliance on Off-White as the main driver of revenue within the group would have been a problem. (What comes up must come down, and Off-White was on its way down.)
I’ve heard rumblings that NGG might merge with another brand incubator—like Tomorrow, for instance—but the reality is that LVMH, which owns a majority stake in Off-White, would be wise to simply buy the license back from NGG and Farfetch, let it languish for a while, and relaunch it in earnest when the timing is right.
As for the rest of the NGG brands: One in-the-know executive suggested that Authentic Brands Group, the brand-licensing vacuum that has a deal with NGG to produce Reebok, might take them over. But NGG is a shell of its former self, and anyone would be better off getting into business with its founders, Davide De Giglio and Andrea Grilli, who built it in the first place, than to buy the remnants. |
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| Perhaps now, with a new backer, Neves will do what everyone wants him to do: shed all the subsidiaries, including Browns and sneaker reseller Stadium Goods, too, and focus on making the marketplace business profitable. Given the scale of his ambition, this may feel small. But it’s remarkable that not one of Farfetch’s previous investors was able, or compelled, to bail it out.Even so, Neves did change the fashion industry. The arrival of Farfetch on the scene foreshadowed much of what would transpire in luxury retail over the next decade. As the luxury industry consolidated, top brands backed away from selling at multi-brand retailers, focusing on their own channels instead. Selling directly is more profitable, and targeted online marketing allows you to reach just as many people, all while owning the customer relationship. There is still value in being seen in a chic department store or a cool concept shop, but it’s not as deep as it used to be. Farfetch normalized the use of the concession model online. Now, it’s common for top brands to have concession deals with online retailers—meaning that the brand owns the inventory, and the retailer just gets a percentage of sales. That has fundamentally limited how big retailers can be.
But, amid all this Farfetch drama, I can’t stop thinking about the fate of Net-a-Porter, still a far more important brand in the eye of the consumer. In a statement, Richemont said that it will “consider alternative options to pursue the realisation of its Luxury New Retail (‘LNR’) vision and is confident that its Maisons will benefit from cutting-edge platform technology to best serve the growing omni-channel needs of their discerning clientele.” I’m not sure exactly what that means, but I do know they’ve got to get rid of YNAP. I emailed Bernstein’s Luca Solca, who suggested that Richemont would find a buyer, or that it may eventually wind the division down.
It’s quite a reversal, of course, from the market thesis only a few years ago. How can luxury fashion be a winner-takes-all market when there are no winners at all? |
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| Line Sheet star and (former WSJ. editor) Kristina O’Neill was just named head of Sotheby’s Media, a newly formed division of the auctioneer. She’ll also be editor-in-chief of Sotheby’s Magazine. Congrats to Kristina for making a classy move, and for keeping the dreaded words “chief content officer” out of the equation. [Inbox]Vogue Runway’s year-end poll is very fun. [Vogue]
Some fashion trivia from the best Christmas movie. [Twitter]
Stella Bugbee is very smart and I enjoyed listening to this interview. [The Title of This Podcast Is Really Annoying and Illustrates Why Magazines Are Increasingly Irrelevant]
This piece about the fashion on Survivor is an example of how Stella is smart. [New York Times]
Schickimicki! The booming market for skiwear is summed up in this thorough market report. [5 Things]
Bernard Arnault just bought another building on the Champs-Élysées. This one apparently cost close to $1 billion! [Fashion Network via Style Not Com]
I thought everyone knew about Maria Grazia Chiuri’s theater restoration project in Rome, but I guess not? [WWD]
H&M is trying to move further upmarket as it gets undercut by Shein. [Reuters]
Also, here’s a reality check for you. In a recent interview, Anish Melwani, who runs LVMH in the U.S., admitted that the “average customer doesn't care terribly much about sustainability.” You can say that again! (Of course, responsible production is important anyway.) |
| And Finally… My Interview With Ana Andjelic |
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A few weeks back, I flew to an Art Baseled-out Miami to chat with Esprit’s global chief brand officer about what she’s doing to revive the 1980s icon. We also talked generally about how to make retail work in the modern age. Ana doesn’t speak in marketing jargon, thankfully, but we did cover all the pressing issues that people who do understand that world will care about. Thanks to Ana and the Esprit team for having me. Below is a snippet of our conversation, which you can read in full here:Lauren:
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In retail, everyone is too reliant on data. There are no more merchants left. There’s no one with this
sense
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. I think you have it; I’m not just saying that. How do you balance your instinct with all of this information that's coming in constantly in real time?
Ana: Well, number one, I’m present. And I get my hands dirty. I make an informed hypothesis. For example, I was convinced that the American customer is not price sensitive. I was like, You know what? Don’t believe me. Let’s open our pop-up. Let’s use it as a test and learn. And of course, they’re not. You know? I'm like, they’re not going to care. They’re going to buy $300 cashmere. But you need to test that. And then, why are we sending the same merchandise to all the different stores? No, no, no. Miami is sequins. L.A. is more sporty. It sounds obvious, but you have to test it. And then you get the data, and then you start going. But that first hypothesis needs to come from that sense.
Lauren: There are so many iconic brands trying for a revival. Success today usually happens through being popular on TikTok, and having super, super, super trendy clothes. I went into a big mall store last year that’s doing really well on the stock market, and every single rack had a flier on the front that said, “As seen on TikTok.” If you’re a public company, that works great—it makes people happy because your sales are up—but to me, that’s not a long-term solution.
Ana: One of the first things I did when I joined was brand vision, which was asking, What is the aesthetic territory that we want to own? And when you do that, you can’t really go back and look. That was then, this is now. Nostalgia works for one second, and then it doesn’t, you know? So you can’t build a brand on memories.
The most important thing is to build a strategy for product assortment. People don’t think that that’s under “brand,” but it actually is. I work very closely with our chief product officer, but the point to me is like, What are the hero items? What is the collection? What is the foundation?
I strongly believe that if you’re reviving the brand, you can’t chase trends. Everyone says you need to move at the speed of culture. Yes, but no. Yes, with content. With product, no. You need to know who you are. You need to know what your identity is. So we are closer to The Row or Brunello Cucinelli, in a sense. If you like it, amazing. If you don’t like it, that’s also okay. You can still buy a T-shirt… |
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| Until Thursday,
Lauren |
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| FOUR STORIES WE’RE TALKING ABOUT |
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| Old School |
| What should we expect from our elite institutions? |
| BARATUNDE THURSTON |
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| Times Flies |
| Notes on James Bennet’s screed about the Gray Lady. |
| DYLAN BYERS |
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