W22- Ssense, Valentino, Burberry, Ferrari, Hermes, Apple, Bal Harbour, Sergio Rossi, Patek Philippe
Weekly Luxury Podcast summarizing the news for the week of June 7, 2021
Ssense valued at $4.1 5 billion after taking on minority investment
Sergio Rossi acquired by Fosun. NuOrder acquired by Lightspeed
Valentino : launches make-up collection. Hosts NFT art exhibit
Burberry unveils ambitious sustainability program
Resale: MyTheresa x Vestiaire. Mulberry launches Buy Back program
Ferrari: an unusual new CEO. Unveils first Fashion Show in Italy
Collabs: Balenciaga x PS5 collab. Hermes x Mc Laren.
Tech: Apple converts 2D into 3D. Sotheby’s opens virtual gallery in Decentraland
Bal Harbour Shops unveils eCommerce functionalities
Patek Philippe retires its most iconic watch
The biggest news of the week came from online marketplace Ssense, which took on a minority investment from Sequoia Capital, valuing it at $4.1 billion dollars. It is the first round of external funding since the company was founded in 2003. Ssense is an eCommerce retailer based out of Montreal, specialized in designer fashion and high-end streetwear, which claims to have experienced double-digit growth and profitability since inception. With an average of 100 million monthly page views, the majority of their audience is between 18 and 40 years old. Their success was built on a strong and ambitious editorial content strategy, which allowed them to build strong credibility amongst the youth culture. The company describes itself as a tech platform and explains that they have been laser focused on customers since day one. The proceeds will be used to expand Ssense globally, especially in China. This is the latest financing story propelling an online luxury retailer way above the billion dollar valuation. It feels like it is an arms race for grabbing these market shares and taking on a dominating position.
2. To continue on the Finance topic, there have been a few more acquisitions this week. Sergio Rossi was acquired by Fosun and joins a portfolio of brands which includes Lanvin, Wolford, Caruso and St John Knits. The objective for the Italian luxury shoemaker is to expand its operations, especially in Asia. Fosun also plans on creating synergies between all its brands thanks to Sergio Rossi’s fully-owned factory. The brand currently operates 64 stores worldwide, of which 45 are directly owned flagship stores with the remaining stores franchised.
Finally, the ecommerce consolidation continues. Nuorder was acquired by Lightspeed for $425 million dollars. Nuorder is an LA-based company founded in 2011, which facilitates B2B transactions between retailers and brands. It provides virtual showrooms and payment processing. They have more than 3,000 brands and 500,000 retailers, including Saks, and Bloomingdales. Light speed is a point-of-sale software company based in Canada and publicly traded, with a $9.4 billion dollars market cap.
3. A few news coming from Valentino. First of all, the Italian fashion house reported a loss of 127 million euros during the pandemic, compared to a 33 million euro profit in 2019. In 2020 sales dropped by 27% to reach 882 million euros. On a more positive note, Valentino expanded into beauty by launching an extensive make-up collection. With more than 50 shades of lipstick, which can all be refillable, 40 shades of foundation, eyeshadow, liner and mascara, the collection wants to be inclusive and capitalize on the iconic Valentino Red color introduced in 1959. Finally, to conclude on the topic of Valentino, the italian fashion house hosted an art exhibit in their Soho store, displaying NFT artwork from british artist Matthew Stone. The artist is known for his digital paintings, which start on traditional canvas. He then takes pictures of his paintings and finalizes the painting using a virtual 3D modeling software. 4 NFTs were on display at the store and the exhibit had a really cool
4. Burberry unveiled their sustainability program and the ambitious objective to become net-positive by 2040. In doing so, the fashion house becomes the first luxury brand to commit to reaching a net-positive environmental impact instead of the standard climate neutral objective. How will they do that? First of all by removing carbon dioxide from the atmosphere. The brand also created the Burberry Regeneration Fund, to finance projects around carbon removal and climate projects which serve vulnerable frontline communities. Burberry also wants to advocate for change in the luxury industry through partnerships with NGOs, peers and policymakers. This is not new for Burberry, which plans on being carbon neutral by next year, while all their shows and events have been carbon neutral since 2019. It also sources 93% of its electricity from renewable energies.
5. Let’s review what happened in the fast growing resale market. First of all, Mytheresa partnered with Vestiaire Collective to launch an exclusive resale service for Mytheresa’s high-end luxury clients. Only top clients will be able to access a dedicated web page where they can upload the products they would like to sell. They will receive a quote and after quality checks, payment will be in the form of a Vestiaire Collective voucher. The item will then be made available on Vestiaire’s website. Initially, the items eligible for resale are handbags from a set list of approx. 20 luxury designer brands and for customers in Europe. But both companies plan on rolling out the service to more markets and expanding the product categories.
Then Mulberry goes deeper in the second hand market, by launching a buy-back program. Customers or the British fashion house will be able to sell their handbags to the brand, which will refurbish them and put them on sale on a dedicated second hand section of their website. The repurchase price will be 25% of the initial purchase price in the form of a voucher. If the bag is in poor condition and cannot be refurbished, Mulberry can still buy it back and send it to one of their partners in Scotland, which specializes in leather recycling.
6. Ferrari was in the news this week. They appointed a new CEO and it had the entire industry raising eyebrows ! Their new CEO, Benedetto Vigna, has zero experience in automotive or even consumer goods and is an electronics executive coming from STMicroelectronics. His mandate will be to reinvent Ferrari, after the iconic car maker went through multiple management changes over the past few years. The upcoming challenges will be to lead the technological changes the company needs, in terms of bringing to market electric vehicles and continuing to inject electronics at the service of the customer experience. He will also oversee the formula one team.
Ferrari’s revenue dipped by 9% during the pandemic but the company was profitable. Although earnings were down the company rebounded to post a record profit in the fourth quarter and has projected another boost in profits this year. To put things in context, Ferrari sold 9,200 cars in 2020, at an average price of roughly $370,000.
Then, a bigger news regarding Ferrari with the launch of their first ready to wear collection, which was unveiled at a fashion show over the weekend in their Maranello factory. This shows that Ferrari wants to establish itself as a lifestyle brand and grow by expanding its product categories outside of its core business. With sustainability becoming an ever so important concern for the new generation of consumers, and the advances in electric vehicles, it is time for Ferrari to capitalize on its enormous brand equity and diversify in the top luxury segment. Also, Ferrari is owned by Exor, the investment vehicle of the Italian billionaire Agnelli family. Exor owns Georgio Armani and recently acquired 24% of Christian Louboutin.
Ferrari drives 11% of its annual revenue from licensing its brand name. With the launch of their fashion collection, they plan on reducing the overall volume of licensed products sold in order to protect its brand image.
7. Let’s review some cool collabs for the week. First of all, Hermes partnered with luxury carmaker McLaren for a unique special order. The project came out of Hermes’ Bespoke and Special Projects department, which has developed the ability to outfit pretty much any object. They dressed the interior of the car in beautiful tan Hermes leather. With a price tag of 2.1 million pounds, there are only 106 units of the McLaren speed tail around the world, and one of them has Hermes interior finish. That's ultimate luxury for you.
Then, Balenciaga partnered with Sony PlayStation 5 to release a small collection of T-Shirts and hoodies with the console’s logo. 2 interesting facts. First of all, the collection came out months after the release of the PlayStation 5, and surprisingly, the items are actually more expensive than the actual console.
Finally, Pucci and Supreme launched a men’s capsule collection available in the US and Japan. The drop includes a variety of men’s clothing in three colorways inspired by Pucci’s prints from the 60s and 70s. From t-shirts to soccer jerseys and a smoking jacket, the collection also includes a range of accessories like sunglasses, caps, belts and lighters.
8. On the tech side, there was major news from Apple this week. They announced a significant update to their Reality Kit technologies, which will allow developers to turn pictures taken on an iPhone into a 3D model. That new 3D object can then be inserted in Augmented reality scenes. The process is quite simple, as developers only need to take pictures of the object from different angles, including the bottom, and then write a few lines of code in a software called Capture Object, to create the 3D version of that object. This is an important milestone in my opinion, as it signals major improvement for the next frontier of e Commerce, which is to replace the flat 2D product pictures by more compelling 3D versions.
Then, Sotheby’s opened a replica of its headquarter in Decentraland. For those of you who have never heard about Decentraland, it is a metaverse world created in 2015 where users create avatars to interact with one another, purchase goods and services, and create art. Sotheby’s virtual gallery is a replica of its New Bond Street gallery, and is located in Decentraland’s prime art hub, known as the Voltaire Art District. Sotheby’s also made headlines this week for their auction of a rare crypto punk which sold for $11 million dollars. If you don’t know what crypto punks are, look it up, it’s fascinating. Sotheby’s recent tactical moves show how serious they are about tapping into the digital art world!
9. Bal Harbour Shops launched their own eCommerce, called Bal Harbour Shops Marketplace. It is not intended to be an online shop of all the luxury stores available at the shopping center, but rather a natural evolution of the existing website, which is loaded with content promoting the brands and activities at Bal Harbour Shops. It will now be possible for users to shop an editorial look. Also, Within some of the stories, clicking on an image will prompt visitors to either call the store, make a private appointment at the store or buy online. There’s also a microsite with an assortment of merchandise that can be purchased online. It is up to each brand and store to participate or not. Bal Harbour Shops do not intend on competing with large online retailers, but instead enhance their customer experience and digital journey by offering new functionalities which benefit the stores and the overall shopping center.
10. Patek Philippe shocked the watch world by announcing they were retiring one of their most iconic models, the Nautilus ref. 5711. The watch retails for $30,000 dollars and the wait time to get it can sometimes be as long as 8 to 10 years. The fastest way to get the watch was to buy it on resale websites, but usually at a huge markup, around $60,000 dollars. Since the news broke that Patek was retiring the watch, the resale price skyrocketed to above $100,000. So, why kill such an icon? According to Patek, the objective is to lower the brand’s dependence on that one watch and they don’t want Patek’s image to be associated only with that one model. It will give more breathing room to other watches, and also stop the speculative market on that Nautilus. To service some clients from the long wait list, Patek will supply a last batch of 5711, and replace it with a new model, which the brand is confident will satisfy watch aficionados and usher in a new era for Patek Philippe.