Business Of Fashion : Sequoia Capital China Bets on Contemporary Norwegian Label

Sequoia Capital China Bets on Contemporary Norwegian Label Holzweiler
The venture firm has acquired a majority stake in the brand as it eyes global expansion, suggesting investors still see opportunity in well-placed fashion plays despite looming economic headwinds.

Contemporary Norwegian label Holzweiler has built a dedicated fan-base for its well-constructed basics with a Scandi-chic edge. Now, it’s eyeing global expansion with the backing of venture firm Sequoia Capital China.

The venture firm is taking a majority stake in the brand in a deal announced Monday. The financial terms were not disclosed, but the brand’s founders, siblings Susanne and Andreas Holzweiler, and creative director Maria Skappel Holzweiler (also Andreas’s wife) will retain a minority stake.

The investment comes at a challenging time for emerging fashion labels as soaring inflation and a looming recession raise concerns customers will pull back on spending. Typically, the already-crowded and competitive contemporary market suffers the most during economic downturns as shoppers fall back on higher-end luxury investment pieces or value-driven purchases from mass-market retailers, if they spend at all.

But over the last few years of upheaval, a handful of contemporary brands have shown resilience thanks to solid business models, strong customer relationships and savvy marketing and brand positioning that gave them cachet on sticky issues like sustainability and responsible production.

Perhaps the most successful example of this strategy is the Danish label Ganni, which was bought by L Catterton in 2017. The LVMH-backed venture firm is reportedly now exploring a sale that could value the company at up to $700 million.

“There is still disposable income to spend as long as … brands are meeting the needs of those consumers [with] good quality, timeless pieces,” said Fflur Roberts, global head of luxury goods at market research firm Euromonitor International.

Since it was founded in 2012, Holzweiler has leaned into its own version of this playbook. It launched with scarves, hero products that helped it carve out an early niche. It’s branched out with collaborations that racked up cultural cachet inside and outside the fashion world — from designing a hoodie for Sarah Andelman’s Parisian concept store Colette, to launching a fine-dining restaurant in Oslo.

The company is expecting consolidated turnover of around $50 million this year, up 60 percent from 2021. The brand has been profitable since day one, Andreas Holzweiler said.

With the help of the investment from Sequoia, and its new owner’s expertise in the Chinese market, the brand is aiming to surpass €100 million ($102 million) in sales. It has plans to expand its physical retail footprint, starting with a flagship store in Copenhagen, Denmark in October and its first London store in Spring 2023. Store openings in key US and Chinese cities will follow, with the brand also launching with Chinese online luxury seller Tmall next month.

The move comes after some six years of brand-building and three years of scaling up the business, which included hiring its first chief marketing officer in March this year.

“You get to certain points [of] growth, where you can take things organically and you can build a solid backbone for your brand,” said Andreas. “But I think it comes to a point where if you want to globalise the brand ... you both need more in-house knowledge, but also the scale and the knowledge [of an investor].”

Since early 2021, Sequoia Capital’s China arm has bolstered its fashion portfolio to include Parisian brand Ami and South Korean contemporary brand We11done, in both cases with a view to scale for global expansion. It also holds a minority stake in luxury e-commerce company Ssense and Chinese ultra-fast-fashion juggernaut Shein.

WWD : Is Meta Uncertainty Metastasizing?

Is Meta Uncertainty Metastasizing?
The tech giant's latest moves suggest it's scrambling to shore up its current business while it focuses on its future.

The latest string of moves from Meta suggests a tech giant scrambling to adjust a new reality.

It’s common for platforms to regularly update features, but less so for big players to make changes to features that affect key business lines and revenue. And yet, Meta appears to be actively engaged in reshaping its future and current commerce business.

If nothing else, the changes underscore how pivotal Instagram has become to the tech giant. The company expanded shopping features on Instagram, with new purchasing capabilities that allow users to buy products directly through chat, but narrowed commerce features on Facebook, which will be stripped of live shopping as of Oct. 1.

How much the moves will affect brands remains to be seen. But those effects will likely vary anyway, according to Jen Jones, chief marketing officer of CommerceTools, a software company for e-commerce that works with major brands and retailers such as Sephora, Ulta Beauty, H&M and others.

“The majority of our clients are either big retailers selling directly to customers or brands that are really focusing on a direct-to-consumer strategy,” she told WWD. “I think an announcement like this from Meta really isn’t going to impact them as much. [But its ad business] does, I think, tend to play with some of these smaller companies, brands and retailers.”

It’s also not clear what its choice to cut live shopping, at least on Facebook, will mean in the long run. The e-commerce trend is enormously popular in Asia, and it was forecasted to reach $35 billion in U.S. sales by 2024. And yet, even TikTok seemed to back off of it, reportedly scaling back plans in the U.S. and Europe last month. Now Meta is stepping back.

But the move may be less about the success of livestream shopping than the desire to propel Reels, the short video format on Facebook and Instagram that Meta has been touting as a potentially large revenue driver.

If it wants to narrow its video options and nudge the attention to Reels, it’s not necessarily a death knell for the format, either.

“If you think about Meta and TikTok, even, and the consumer behavior there, I think that’s a little different than maybe sitting on a livestream where you’re focused for a longer amount of time, like on YouTube,” Jones explained. She’s also seen great success on owned channels, like brands’ websites. For instance, she sees Sephora doing quite well with its own livestreams.

Such moves matter in the Meta universe, but perhaps not as much for its long-term vision, which is wholly focused on all things metaverse. In that domain, the company was particularly busy last week.

Meta broadened its NFT rollout on Instagram to more than 100 countries across Africa, the Asia-Pacific region, the Middle East and the Americas. It also revealed that it will add new support for wallets from Coinbase and Dapper Labs, owner of NBA Top Shot, along with the Flow blockchain.

A lynchpin for cryptocurrency transactions, Crypto wallets hold the private keys necessary to access the coins and, often, the NFTs its owner buys. In a minor but oddball footnote, chief executive officer Mark Zuckerberg also released one of his old Little League baseball cards as an NFT showing the little tech tycoon-to-be up to bat.

Quirky, yes. Noteworthy? Also yes. Because Meta may have set its course for the metaverse when it changed its name and mission last year, but it appears to be hitting the gas pedal on the whole affair now.

Anyone who’s surprised hasn’t been paying attention. Zuckerberg himself has often acknowledged that this next, “embodied” iteration of the internet may take as long as a decade to arrive. Others peg up to 20 years. And what’s become increasingly clear is that Meta can hardly afford to wait that long.

The social media-cum-metaverse giant made history earlier this year for the greatest loss in market value for a U.S. company, hemorrhaging more than $230 billion. It followed that up by reporting the first revenue loss in its history as a public company in the last quarter, driving shares down more than 50 percent.

Some investors and analysts still aren’t keen about its new metaverse goals, but that’s not the main reason. Heightened competition from TikTok and ongoing challenges from Apple’s privacy update, which thwarts ad-targeting, blends with market forces, changing user behaviors and other factors were, apparently, a killer combination. It all led to Meta taking on debt by launching its first bond sale in recent days.

Altogether, it looks like the business that advertising built is on shakier ground. That’s a problem, because it seemed that the company was depending on its social media platforms, with its advertising and related commerce efforts, to bring in the money and stability while it focuses on its larger and more costly ambitions within crypto, the metaverse and NFT initiatives. For now, that looks like anything but a certainty.

>>> US After Hours Summary: GDRX +55.9%, LMND +13%, SWAV +8.6%, QLYS +7.4%, PUBM

After Hours Summary: GDRX +55.9%, LMND +13%, SWAV +8.6%, QLYS +7.4%, PUBM +7% higher on earnings; NVAX -32.5%, CARG -15.6%, DDD -13.8%, TREX -11.2%, UPST -9.8% lower on earnings; HEAR -34% falls on earnings an decision to remain independent

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: GDRX +55.9%, LMND +13%, EGIO +10%, SWAV +8.6%, QLYS +7.4%, PUBM +7%, DM +4.8%, VLDR +4.7%, DCGO +4.2%, NWSA +3.6%, HBM +3.4%, PFG +3.3%, DOCN +2.3%, AAON +2%, INSG +1.5%, OKE +1.5%, VAC +1.3%, CBT +1.2%, BCOR +1%, APPS +0.8%, AIG +0.5% (also to defer Corebridge Financial IPO), HIMS +0.5%, MRC +0.3%, ESE +0.2%, PRA +0.2%, VSAT +0.2%, PRI +0.1%

Companies trading higher in after hours in reaction to news: MRSN +17% (MRSN announces collaboration with GSK, granting option to co-develop and commercialize XMT-2056), RXST +5.4% (files for $200 mln mixed securities shelf offering), VALN +4.1% (PFE and VALN announce initiation of a Phase 3 clinical study), MDU +3.2% (Corvex discloses 4.99% active stake; intends to enter into discussions), SKIN +0.8% (Luxor Capital Group discloses 5% passive stake), GSK +0.2% (MRSN announces collaboration with GSK, granting option to co-develop and commercialize XMT-2056), EVTL +0.1% (stock offering), CRM +0.1% (names new COO)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: NVAX -32.5%, CARG -15.6%, TASK -14.9%, BIRD -14.8%, VRM -14.6%, DDD -13.8%, WPRT -12.3%, TREX -11.2% (expects a significant reduction in revs in 2H22), UPST -9.8%, CLOV -8.8% (also to transition role of CEO to co-founder Andrew Toy), BLNK -7.9%, FRPT -7.8%, ME -7%, SDC -7%, VXRT -6.8%, LPSN -6.5%, EHTH -6.4%, ACCO -5.7%, NCMI -5.6%, OPRT -4.9%, FGEN -4.1% (also files mixed securities shelf offering), TXG -4.1%, GRPN -3.7%, YMAB -3.7%, ACM -3.4%, TTWO -3.4%, ACAD -3.1%, DOOR -2.3%, IGMS -1.8%, SKT -1.6%, ICUI -0.6%, HLIO -0.2%, VVNT -0.2%, NE -0.1%, NHI -0.1%, SWCH -0.1%, PWSC -0.1%, TPTX -0.1%

Companies trading lower in after hours in reaction to news: CRMD -61.1% (receives a second CRL regarding DefenCath NDA), HEAR -34% (provides update on strategic review; will remain a standalone business; also reports earnings), QTRX -25.7% (exec chairman stepping down), SOVO -9.4% (stock offering), PTLO -6% (stock offering), PFLT -5.7% (stock offering), GOEV -4.8% (files mixed securities shelf offering), METC -3.2% (to acquire 100% of membership interests in Maben Coal LLC for $30 mln), RLYB -1.7% (files for $300 mln mixed securities shelf offering), KRTX -1.2% (stock offering), BRBR -1.1% (stock offering), RCUS -0.4% (names new CMO), PFE -0.3% (PFE and VALN announce initiation of a Phase 3 clinical study)

>>> TradeGate Pre-Market Indications

  • DAX:
    • Zalando (ZAL TH) +1.5%
      • Stock gained 13% last week
    • E.On (EOAN TH) +1.4%
      • EON Concerns Now Somewhat Priced In, Morgan Stanley Upgrades
    • HelloFresh (HFG TH) +1.3%
    • Infineon (IFX TH) +1.2%
    • Adidas (ADS TH) +1.1%
    MDAX:
    • Uniper (UN01 TH) +3.5%
    • Thyssenkrupp (TKA TH) +1.8%
    • Rheinmetall (RHM TH) +1.7%
      • Rheinmetall Raised to Outperform at Exane; PT 212 euros
    • Duerr (DUE TH) +1.5%
    • Siltronic (WAF TH) +1.4%
    • Siemens Energy (ENR TH) -1.5%
      • Siemens Energy Posts Loss on Russia Exit, Wind-Turbine Unit
    SDAX:
    • About You (YOU TH) +3.4%
    • Adler Group (ADJ TH) +2.8%
    • BayWa (BYW6 TH) +2.4%
    • Traton (8TRA TH) +2.2%
    • PNE AG (PNE3 TH) +2.1%
    • Deutsche Euroshop (DEQ TH) -1.2%
    • Takkt (TTK TH) -2.5%
      • Takkt Downgraded to Hold at Berenberg as Risks Begin to Mount

>>> What to look at today - 8th of August 2022

A bounce in stocks paused and US equity futures wavered Monday, hampered by expectations of aggressive interest-rate hikes by the Federal Reserve to tackle the highest inflation in a generation. Retreating tech shares were among the drags on MSCI Inc.’s Asia-Pacific stock index. Covid lockdownsin a Chinese resort island also hit sentiment, while Hong Kong’s move to cut mandatory quarantine failed to ignite much optimism. S&P 500 and Nasdaq 100 contracts fluctuated after global shares completed a third straight advance last week in a rebound from bear-market lows. European futures painted a more upbeat picture, hinting at modest gains.
Strong US jobs data Friday added to the case for more Fed monetary tightening. That’s pushed up Treasury yields and the dollar. A key part of the US bond curve is close to the most inverted level since 2000, suggesting investors foresee a recession ahead as the Fed applies the brakes on the economy. Crude oil remained below $90 a barrel, restrained by worries about the demand outlook. Both gold and Bitcoin struggled to make much progress. Traders now see greater odds of another 75 basis-point Fed hike in September, part of a global wave of rate increases. US inflation data this week could shape views on that policy path and inject more market swings. While price pressures may be topping out, it’s unclear if they will persist a stubbornly high levels. The US Senate passed a landmark tax, climate and health-care bill, speeding a slimmed-down version of President Joe Biden’s domestic agenda on a path to becoming law. Incoming reports showed China’s trade surplus rose to a record. The nation’s economic rebound faces potential global headwinds as well as domestic Covid flareups and property-sector woes.

Nikkei +0,28% Hang Seng -0,78% CSI -0,28% Shanghai +0,15% Shenzen +0,47%

Eur$ 1,0185 CNH 6,7688 CNY 6,7632 JPY 135,25 GBP 1,2079 CHF 0,9613 RUB 61,0135 TRY 17,9397 WTI$ 89,20 Gold 1,773,15 -1,3% BTC 23,380 +4% ETH 1,721,15

S&P +0,00% Nasdaq +0,10% EuroStoxx +0,65% FTSE +0,38% Dax +0,56% SMI

Macro :
- Italian Stocks In Focus After Center-Left Coalition Collapses
- Watch Solar, Wind Stocks After US Senate Passes Landmark Bill
- Hedge Funds Appear to See Everything as Overpriced
- *CHINA JULY TRADE BALANCE 682.7B YUAN; EST. $600.0B YUAN

Keep an eye on :
- AIR FP : The French Backwater Transforming Airbus Jets to Feed Cargo Boom
- AAPL US : Apple Loses Bid to Dismiss Consumer Biometric Privacy Lawsuit
- BAYN GY : Bayer Gets FDA Approval for Widening of Nubeqa Use
- BLUE US : *BLUEBIRD BIO SPIKES 21% AFTER REPORT OF PFIZER FOR GBT TALKS
- COFB BB : Cofinimmo to Buy Nursing Home in Juelich for EU18m at 4.5% Yield
- DTE GY : *T-MOBILE ISSUER CREDIT RATING TO INVESTMENT GRADE BY S&P
- EDF FP : Con Ed’s $3 Billion Green Arm Said to Draw Total, RWE Interest
- EOAN GY : EON Concerns Now Somewhat Priced In, Morgan Stanley Upgrades
- GBT US : Pfizer in Talks to Buy Global Blood for About $5 Billion: DJ
- HYQ GY : Hypoport 1H Ebit EU30.2M Vs. EU21.8M Y/y
- JOUL LN : Next Is in Talks to Buy a Stake in British Retailer Joules: Sky
- MITRA BB : Mayne Pharma Says FDA Approves Abbreviated NDA for Haloette
- AERO SW : Montana Aerospace 1H Adjusted Ebitda EU33.9M Vs. EU22.6M Y/y
- NEXT LN : Next Is in Talks to Buy a Stake in British Retailer Joules: Sky
- PNL NA : PostNL Cuts FY Normalized Ebit Forecast
- QQ/ LN : QinetiQ Seeks US Expansion in $590m Avantus Deal: M&A Snapshot
- RNO FP : Renault Is On Right Track With New Electric Vehicle, CEO Says
- RWE GY : Con Ed’s $3 Billion Green Arm Said to Draw Total, RWE Interest
- SAS SS : SAS Pilots Vote to Approve New Labor Deal That Ended Strike
- ENR GY : Siemens Energy 3Q Adjusted Ebita Loss EU429M, Est. Loss EU245.3M
- TIT IM : Telecom Italia May Explore Plan B for Network Spinoff, CEO Says
- TERB BB : Ter Beke Faces In-Depth Dutch Probe of Stegeman Acquisition
- TSLA US : Tesla Slips After 3-for-1 Split Gives Investors What They Wanted
- UPS US : UPS Nears Deal to Buy Italian Healthcare-Logistics Provider Bomi Group -- WSJ
- VIE FP : Macquarie Said to Near $2.5 Billion Deal for Suez’s UK Waste Arm
- WETG US : WeTrade Soars Amid Monkeypox Test Partnership, Up 455% Since IPO

>>> Europe : Brokers Upgrades & Downgrades - 8th if August 2022

>>> Up
* Playtech Raised to Buy at Deutsche Bank; PT 602 pence
* Rheinmetall Raised to Outperform at Exane; PT 212 euros
* Saipem Raised to Hold at Jefferies; PT 90 euro cents
* Totens Sparebank Raised to Buy at Norne Securities

>>> Down
* Aurskog Sparebank Cut to Hold at Norne Securities; PT 215 kroner
* Aurskog Sparebank Cut to Hold at Norne Securities; PT 215 kroner
* Close Brothers Cut to Hold at Investec; PT 1,170 pence
* Just Eat Takeaway Cut to Equal-Weight at Morgan Stanley
* Marel HF Cut to Hold at Berenberg; PT 4.60 euros
* M&G Cut to Underweight at JPMorgan; PT 210 pence
* Roku Cut to Sell at Pivotal; PT $60
* Subsea 7 Cut to Underperform at Jefferies; PT 70 kroner
* Takkt Cut to Hold at Berenberg; PT 12.90 euros
* Vestas Cut to Sell at Fearnley; PT 155 kroner

>>> Initiation
* Deezer Rated New Hold at Deutsche Bank; PT 5 euros
* De Nora Rated New Buy at Goldman; PT 24 euros
* Var Energi Rated New Overweight at Barclays; PT 53 kroner

>>> Call
* Close Brothers Cut at Investec on ‘Unremarkable’ Return Profile
* Just Eat Takeaway Cut at MS on More Challenging Growth Case
* Takkt Downgraded to Hold at Berenberg as Risks Begin to Mount