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WHP Global announced on Tuesday it has entered into an agreement with Xcel Brands, which will see the brand management firm acquire a 70% stake in fashion brand Isaac Mizrahi from the media and consumer products firm.
The transaction, valued at $68 million, includes $46.2 million in cash proceeds to Xcel, which will retain a 30% minority interest in the Isaac Mizrahi brand - Isaac Mizrahi
The transaction, valued at $68 million, includes $46.2 million in cash proceeds to Xcel, which will retain a 30% minority interest in the Isaac Mizrahi brand. Under the terms of a services agreement with WHP Global, Xcel will continue to manage the Isaac Mizrahi's QVC (a U.S. television network and shopping channel owned by Qurate Retail Group) business with WHP Global and has entered into a new license agreement to design and distribute Isaac Mizrahi apparel in the U.S. and Canada.
Isaac Mizrahi, the eponymous women's fashion label founded in 1987 by American designer Isaac Mizrahi, has garnered a strong following among several celebrities including Michelle Obama, Oprah Winfrey, Audrey Hepburn, Meryl Streep, Rihanna, Julia Roberts, Anne Hathaway, Kate Hudson, Selma Blair, Naomi Campbell, Kate Moss and Carla Bruni. Since its inception, the brand has expanded into sportswear, footwear, handbags, watches, eyewear, tech accessories, home and other merchandise, which has seen it win four CFDA awards from the Council of Fashion Designers of America and generated more than $1 billion in retail sales.
Today, it is sold in Saks Fifth Avenue and Hudson’s Bay; interactive television, including QVC and The Shopping Channel; national specialty retailers; and internationally in Canada, Italy, the United Kingdom and Japan.
On the investment from WHP Global, Isaac Mizrahi, who will continue to serve as chief design officer of his namesake brand, said, “I’m very excited to harness the power of my brand. I couldn’t ask for better partners.”
Xcel Brands CEO and chairman Robert D’Loren said the Isaac Mizrahi brand has grown for more than a decade under its leadership, adding the new arrangement with WHP looks to take the label's growth global.
“The Isaac Mizrahi business has grown for 12 years straight under Xcel’s stewardship and we’re pleased to now partner with WHP to continue the brand’s global momentum,” said D'Loren.
“Selling a majority interest in the Isaac Mizrahi brand is a transformative moment in Xcel’s history and represents the first time we have monetized one of our brands since Xcel was founded in 2011. Xcel is now debt-free, with over $17 million in cash and $22 million of working capital on our balance sheet, which will help fuel a number of our upcoming strategic initiatives as we concentrate our resources on growing our brands, new brand launches and investing in livestreaming technology platforms and partnerships.”
With the addition of Isaac Mizrahi, WHP Global now owns and manages over $4.2 billion in retail sales across its portfolio of brands, making it one of the largest and fastest-growing brand management firms in the world.
“We are excited to partner with Isaac and Xcel as we work together to architect and orchestrate the next phase of growth for the Isaac Mizrahi fashion house," said Yehuda Shmidman, chairman and chief executive officer at WHP Global.
"We see meaningful opportunities to expand the brand by leveraging WHP Global’s platform and the reach of our fashion vertical, which now includes Anne Klein, Joseph Abboud, Joe’s Jeans, William Rast and Isaac Mizrahi.”
While it weighed in at $11 billion (€10.27 billion) in 2017, the Indian beauty market is expected to reach $21 billion by 2025. This strong and continuous growth is driven by its 1.4 billion inhabitants and the explosion of the middle class, which has attracted the covetousness of global players in the cosmetics sector. It is against this backdrop that Sugar Cosmetics has closed a $50 million (€46.69 million) Series D funding.
This financing round was led by the Asian branch of L Catterton, the French-American investment fund co-founded by LVMH together with long-time partners A91 Partners, Elevation Capital and India Quotient.
This financial transaction, which comes a year after a $21 million fundraising in which the brand was valued at $100 million, will allow Sugar Cosmetics to continue to expand in the dynamic Indian beauty market, mainly due to a growing interest in skin care products, the rise in online shopping and the increase in consumer spending in the country's secondary cities.
Founded in 2012 by husband and wife Vineeta Singh and Kaushik Mukherjee, the Sugar Cosmetics brand offers skin care and makeup products, and is available online and in 40,000 points-of-sale across India.
There was yet another Indian cosmetics company that made headlines in November 2021. Founded in 2012 by entrepreneur Falguni Nayar, Nykaa, which specializes in selling beauty products online, was listed on the Mumbai Stock Exchange. This listing enabled the brand to raise around €64 million.
A few days ago, the L’Oréal group unveiled the ‘Bold Female Founders’ programme, an initiative designed to provide financial backing to women-led start-ups.
The project, developed within the cosmetics giant’s Bold (Business Opportunities for L’Oréal Development) venture capital fund, is endowed with €25 million in investment capital and, as L’Oréal indicated, it will focus on opportunities in the global beauty ecosystem in the broad sense: from consumer brands to beauty tech, biotech and green sciences.
“By addressing the inequalities that passionate women founders face in their entrepreneurial journey, we bring our sense of purpose to life: create beauty that moves the world,” said Nicolas Hieronimus, CEO of the L'Oréal group.
According to Gouzelle Ishmatova, Bold’s chief strategy officer, 30% of start-ups currently backed by Bold are headed by women: “a more inclusive venture capital industry means more opportunities for under-represented female entrepreneurs. As a matter of fact, start-ups led by women attract less funding, yet they consistently outperform,” she said.
Economist Anne Boring, in her work on the motivations of women entrepreneurs, and the obstacles they face, noted that, according to a 2016 survey by Girls in Tech, of all the start-ups that raised funds in 2015, only 15% were founded or co-founded by women. Moreover, these start-ups accounted for only 10% of total funding raised.
L'Oréal is the world’s number one beauty group, with a portfolio of 35 international brands and 20 R&D centres active in 11 countries, home to more than 4,000 researchers and 3,000 technology professionals. The group employs 85,400 people worldwide. In fiscal 2021, the group generated a revenue of €32.287 billion.
Q1 figures for Farfetch were more muted than some of its recent results and the company warned about the future impact of the wider macroeconomic backdrop that’s currently hurting fashion businesses at all price levels.
In a conference call, founder, chairman and CEO José Neves, also said there's no certainty that the company will make the long-awaited investment in Richemont's Yoox Net-A-Porter e-commerce unit. Richemont had seen its shares sliding a week ago after saying that talks were still happening but it hadn't reached a deal.
For the first three months of the year -- which pre-dated its recent major beauty launch and other key developments -- Farfetch reported Gross Merchandise Value (GMV) and Digital Platform GMV up 1.7% and 2.5% year-on-year, respectively, to $930.8 million and $809.5 million.
Revenue rose 6.1% to $514.8 million while the gross profit margin dipped to 44.8% from 45.5% and the Digital Platform Order Contribution margin was down to 32.7% from 33%.
That translated into a Q1 adjusted EBITDA loss of $35.8 million (wider than the $19.2 million loss of a year earlier) and net profit of $728.8 million. That was higher than the $516.6 million of the previous year but included a one-off non-cash benefit.
The company sad the Q1 Digital Platform GMV growth reflected order growth across the marketplace; an increase in average order values (AOV) from $618 to $632, driven by increases in the full-price item mix and number of items per order; as well as strong growth in the Americas, Middle East and Korea.
But this was offset by softer demand in other key markets, including Russia, where trade was suspended from March with no indication of when trade might resume. China was also tough due to local Covid-19 restrictions that continue to impact orders from the mainland.
Brand Platform GMV decreased by 11.2% to $99.7 million, due to continued delays in order shipments and resulting cancellations arising from the migration to a new warehouse partner. The transition was completed this month, but it said delayed shipments could negatively impact margins into Q2. The GMV decrease also included a 4.5% decline due to changes in foreign exchange rates.
But in-store GMV increased by 62% to $21.5 million, driven by additional openings of New Guards brands’ stores in the last 12 months, as well as growth from existing stores.
José Neves, said: “Our core business remains very strong, in spite of the macro events in China and ceasing operations in Russia, which impacted our performance and outlook. We are galvanised by the opportunity to focus our efforts in 2022 to further rationalise our business, aligning our fixed-cost profile with lower near-term growth, which I believe will enable us to exit 2022 from a position of strength.”
Outside of these external factors, he added that the business saw strong marketplace growth in the Americas and the Middle East, with its “customer and luxury brand relations going from strength to strength, and we continue to make progress towards our mission of building the global platform for luxury”.
And CFO Elliot Jordan said the results “demonstrate our underlying strength and ability to adapt to the changing macro environment whilst building on the momentum we have achieved over recent years. We have navigated unprecedented challenges, grown Digital Platform GMV 64% on a two-year basis, and continue to operate at scale in the global luxury market.
“In light of the current environment we will be tailoring our resource allocation with an eye towards leveraging the platform model advantage we have to increase market share, while also positioning ourselves to expand our profitability to deliver shareholder value.”
For the full year, the company scaled back its outlook and now expects Digital Platform GMV growth of 5% to 10% and Brand Platform GMV growth of 10% to 15%. The adjusted EBITDA margin will be between 0% and 1%.
It said that “uncertainties resulting from the impact of the pandemic, macroeconomic factors and geopolitical turmoil, including the war in Ukraine, could have material impacts on our future performance and projections”.
Despite the cautious outlook and wider loss, the company’s shares rose after the results were released. Having fallen earlier in the week, investors could have been expecting worse news from the firm and were relieved at the actual figures.
London’s Oxford Street is heralded as the UK’s busiest shopping destination, but it’s still struggling to get back to pre-pandemic levels of attraction, according to data from Datscha.
Footfall in Oxford Street is still 52% lower than 2019 levels, making it the worst-hit high street across the UK, analysis by RSM UK claims. It cited the continuing impact of hybrid working, less commuting into the city than in previous years, and the reduction in international and business travel.
Although overall UK footfall was up 4% month-on-month in April, that was driven by significant increases in other cities, including Leeds (+23%), Glasgow (+16%) and Manchester (+11%). London could only managed a month-on-month footfall increase of 5% last month.
But although there are positive signs of recovery across the UK, footfall as a whole, is still 28% lower than in 2019.
Jacqui Baker, partner and head of retail at RSM UK which commissioned the figures, said: “London is still at less than half its capacity when compared to pre-pandemic levels.
“Unfortunately, it’s likely this will continue until the summer when it’s hoped that more international tourists will visit the UK and footfall returns to much healthier levels.”
UK high street kidswear and nursery brand Mamas & Papas is recovering from the pandemic and said sales to the end of March were up 36% year-on-year, “buoyed by more openings, new product launches and its enhanced online presence”.
Over a third of the group sales by volume come from overseas operations, which include 20 franchisee stores across the Middle East and a network of distributors and agents in 40 countries.
The company also gave more details about its plans to step up the expansion of its UK store network over the next 12 months.
It aims to more than double the number of concessions through its strategic partnership with Next, adding another 19 to the 14 it already operates with the retail giant, creating up to 200 jobs.
These will be in addition to the 22 standalone stores it also operates.
It’s part of its “post-pandemic bricks and mortar expansion drive”, which could also include additional concessions with other retailers that are “keen to provide customers with a best-in-class nursery offer”. No further details were available on which retailers it’s talking to.
COO Nathan Williams said: “The pandemic showed us just how much our customers missed visiting our stores. There’s simply no substitute for the quality and depth of experience you can create with bricks and mortar.
“That’s why we’re currently investing so significantly in opening new space across the UK and accelerating the growth of our store estate further this year with new and existing concession partners.”
Watches of Switzerland has continued its undeniably impressive performance and on Wednesday said that it saw a "stellar end" to FY22 with strong momentum going into the new financial year.
The fast-growing luxury watches and jewellery group released a trading update for Q4 and the full year with details of its performance up to 1 May, and it showed how buoyant the luxury watches and jewellery market remains.
Revenue growth of 40% for the full year came with improved profitability and in the final quarter, revenue was up as much as 48%.
As well as its eponymous chains, the group also owns Mappin & Webb and Goldsmiths in the UK, Mayors and Betteridge in the US and operates a number of monobrand boutiques.
CEO Brian Duffy called it “an outstanding year for the group” and said it delivered “another record year of revenue and profitability as we continue to progress our Long Range Plan”.
The performance was also “outstanding” in both the US and UK, “supported by broad-based sales growth across our portfolio of world leading partner brands and driven by domestic clientele”.
And he's upbeat about the potential offered by the company's recent debut in the European market.
He said that overall, the luxury watch and jewellery markets “are dynamic and our group investment-led model continues to gain positive momentum”.
Consumer desire for ‘Super High Demand’ brands like Rolex, Patek Philippe and Audemars Piguet “continues to exceed supply and other luxury watch brands are enjoying exceptionally strong demand and sales. Luxury jewellery demand is also very positive”, we’re told.
So what exactly happened in Q4? Group revenue rose to £304 million from £218 million a year earlier, with US revenue up 50% to £136 million. It opened a flagship Watches of Switzerland branch in Kenwood Towne Center, Cincinnati, Ohio during the period.
UK revenue rose 47% to £168 million and it opened three monobrand boutiques in key locations — Breitling Bullring, TAG Solihull and Omega Meadowhall.
For the year, group revenue rose 40%, as mentioned, to £1.238 billion with US revenue up 48% to £428 million and UK revenue up 36% to £810 million.
FY22 luxury watch sales rose 36% on the year and luxury jewellery sales were up a massive 86%, “reflecting a strong market, continued improvement in ranging, incremental growth from the Betteridge acquisition and the opening of our first Bulgari monobrand boutique”.
Importantly too, group e-commerce sales for FY22 were up 5% on last year, even though the prior year had seen an e-tail boost due to stores being closed. And they were up 128% vs FY20.
The company said sales continued to be driven by a domestic clientele, making up 97% of group revenue.
It now expects FY22 adjusted pre-IFRS 16 EBITDA of between £160 million and £164 million, up from £105 million in FY21.
And it said it enters FY23 “with strong momentum and anticipates that disruption from the pandemic is now largely behind us with ongoing recovery in footfall and airport traffic”.
Based on current visibility of supply of key brands and confirmed showroom refurbishments, openings and closures, it expects FY23 revenue between £1.45 billion and £1.5 billion. Adjusted EBITDA on a percentage basis should be between flat and 0.5% higher. And profit on an EBIT basis should be between £157 million and £169 million.
The billionaire co-founder and CEO of fintech giant Revolut, Nikolay Storonsky, is launching a new venture fund called the Quantum Light Capital Fund.
Storonsky, along with several other investors, will be putting in around $200m (£161m) into the new fund, which has been described as powered by artificial intelligence (AI).
With a total amount raised of $1.8bn (£1.45bn), Storonsky’s Revolut has become one of Europe’s most valuable startups, hitting a valuation of $33bn in July of last year.
The Revolut boss is now looking to bring his knowledge of the tech startup ecosystem to investing. The Russian-born CEO said he was inspired by what he felt were the flaws in the traditional venture capital system.
“Based on my experience as an entrepreneur for the last eight years I found VCs’ product pretty frustrating,” Storonsky said.
“In the bad times no one wants to invest, in the good times they all want to invest — so the lessons were that VCs are pretty unstable and there is some element of crowd mentality.”
The Quantum Light Fund will use an AI-powered system, which has been designed by a team of data scientists and engineers, to scour corporate databases and LinkedIn to identify startups with promising growth without relying on “having human judgement”.
“Different people have different opinions, and this is how you end up with this crowd mentality,” said Storonsky.
This method was inspired by a handful of funds that track databases as a way to find new investment opportunities, although Storonsky believes there is a key difference.
“I interviewed a lot of people from a lot of funds, and they just use data sources to identify breakouts, but this has nothing to do with machine learning.”
The Revolut CEO has previously acted as an angel investor for the Swedish fintech startup Tink, which was later acquired by Visa for $2.1bn.
The half Ukrainian, Russian-born executive earlier this year spoke out to denounce Russia’s invasion of Ukraine.
London-based fintech Thought Machine has doubled its valuation to $2.7bn (£2.2bn) after a $160m funding round featuring institutional investor Morgan Stanley.
The Series D round was led by Singaporean investor Temasek, with Italian bank Intesa Sanpaolo and Morgan Stanley participating. Lloyds TSB Group also provided capital.
Founded in 2014, Thought Machine is a cloud-based banking infrastructure specialist that allows banks across the world to scale up servers and processing power.
The company boasts a client list made up of some of the biggest names in international banking, including JP Morgan, Lloyds Banking Group, Standard Chartered and neobank Atom.
Thought Machine intends to use the new funding to expand into new markets in Asia, specifically Vietnam, Thailand and Indonesia.
“We intend to become the leader in core banking technology, and are being deployed by the biggest, most successful banks around the world,” said Paul Taylor, founder of Thought Machine.
“We will use this new capital to accelerate our expansion plans, serve more clients around the world, and continuously refine the capabilities of our core banking platform and other products.”
Thought Machine operates in the cloud computing space, and while it is aware of the market dominance that Big Tech firms like Amazon have in the cloud, Taylor feels confident there is space for what his company does.
“You have to focus on what is key — Google has done really well on enterprise, but it can’t do everything,” Taylor said in an interview with The Financial Times.
“There are things like payments, fraud, anti-money laundering, tonnes of stuff.”
Investors Intesa Sanpaolo expressed confidence in Thought Machine’s ability to grow rapidly.
“Thought Machine’s cloud-based technology is fundamental to our transformation from incumbent to digital challenger, improving our core banking technology and providing the foundation for our new digital bank, Isybank,” said Carlo Messina, managing director and CEO.
Now sitting at a valuation of $2.7bn, Thought Machine hit the unicorn value of $1bn for the first time after a $200m Series C funding round back in November 2021.
British inflation surged last month to its highest annual rate since 1982, piling pressure on finance minister Rishi Sunak to step up his help for households facing a worsening cost-of-living crisis.
There are also widespread fears that this will dent spending on discretionary items as consumers prioritise necessities, and the fashion and beauty sectors' post-pandemic recoveries could come to a grinding halt.
Consumer price inflation hit 9% in April, the Office for National Statistics said on Wednesday, surpassing the peaks of the early 1990s recession that many Britons remember for sky-high interest rates and widespread mortgage defaults.
The Reuters' poll of economists had pointed to a reading of 9.1%.
Britain now has the highest inflation rate of Europe's five biggest economies and almost certainly the Group of Seven countries, with Canada and Japan yet to report figures for April. Neither are likely to match Britain's price growth.
"We cannot protect people completely from these global challenges but are providing significant support where we can, and stand ready to take further action," Sunak said.
Sterling fell after the data and was down 0.6% against the dollar at 0816 GMT.
Soaring energy bills were the biggest inflation driver, reflecting last month's increase in regulated energy tariffs. Knock-on effects from Russia's invasion of Ukraine means those bills are likely to jump higher again in October.
Households are facing the biggest cost-of-living squeeze since records began in the 1950s, according to Britain's budget forecasters, and consumer confidence has sunk towards all-time lows.
Anti-poverty campaigners called on Sunak to act now, starting with an immediate increase in the value of welfare benefits to match inflation.
"As the price of essentials like food and energy continue to soar, the Chancellor's (finance minister's) inaction will make an already desperate situation for many even worse," Rebecca McDonald, senior economist at the Joseph Rowntree Foundation which campaigns on behalf of lower-income households, said.
A survey published on Tuesday showed two in three people in Britain had kept their heating off when they would normally have turned it on, almost half were driving less or changing supermarkets and just over a quarter say they have skipped meals.
Food prices rose by nearly 7% in the 12 months to April, the ONS said.
On Monday, Bank of England Governor Andrew Bailey, speaking to lawmakers, said food price rises were a major worry as he apologised for "being apocalyptic for a moment."
While the government has said it now has a£ 22 billion ($27.4 billion) package of support for households, much of this is cancelled out by the effect of recent tax increases on workers.
An increase in prices charged by restaurants and cafes, as value-added tax rates went back to their pre-pandemic levels in April, also added to the inflation jump last month.
The BoE this month forecast inflation would top 10% later this year and investors expect it will add to the four interest rate increases it has implemented since December and which have taken its Bank Rate to 1%, its highest since 2009.
"Things are going to get worse before they get better," said Paul Dales, chief UK economist at Capital Economics consultancy of Wednesday's data.
Retail price inflation -- an older measure which the ONS says is now inaccurate, but which is widely used in commercial contracts and to set interest payments on inflation-linked government bonds -- jumped to 11.1% last month, also the highest since 1982.
There were signs of further inflation pressure ahead as manufacturers suffered the joint biggest increase on record in the prices they pay for their raw materials, which were up by an annual 18.6%, matching March's high.
Factories increased their prices by 14% over the 12 months to April, the biggest jump since July 2008.