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Bricks-and-mortar fashion boutiques have been in a tough spot during the pandemic. Small stores, after all, aren’t set up for social distance. Online retailer Mytheresa has been able to fill the void. The website caters to wealthy shoppers looking for help in finding their next designer handbag, pair of shoes, clothing item, or accessory.

Mytheresa, based in Munich, went public in the U.S. in late January, raising about $350 million for the company. The listing grew out of the bankruptcy of Neiman Marcus, which purchased Mytheresa in 2014. The small-cap has a market value of about $2.2 billion.

Mytheresa stock (ticker: MYTE)—technically an American depositary share of parent company MYT Netherlands Parent —was recently trading just below its $26 initial-public-offering price after having jumped to $36 shortly after the debut. The stock could recover those losses and more in the coming months.

“They are at the intersection of two higher-than-average growth trends in retail: luxury and e-commerce,” says J.P. Morgan analyst Matthew Boss.

Luxury buyers have been slower to adopt e-commerce. Before the Covid-19 pandemic, some 12% of global luxury sales happened online, compared with a 20% share of overall retail. The gap is closing. A recent study by consultancy Bain estimates that the share of luxury goods sold online could nearly triple to more than 30% by 2025.

Meanwhile, the overall luxury market is growing by about 7% annually.

The tailwinds put Mytheresa in an enviable position, and the company should get a further boost from its expansion in the U.S. and China, which are currently just 10% of sales each. (Europe was 60% in its latest fiscal year.) The company now has collections for men and kids, and it could expand into categories like jewelry and furniture in the future.

Mytheresa isn’t your typical money-losing tech start-up. The company, which reports in euros, earned €6.4 million ($7.6 million) in its latest fiscal year on €449 million in revenue.

Sales have grown an average of 22% over the past two fiscal years, while adjusted earnings before interest, taxes, depreciation, and amortization, or Ebitda, have grown at a 30% clip. For the fiscal year that ends in June, analysts are forecasting revenue growth of 25%, to €560 million. Analysts, who track adjusted earnings, expect the company to make €30.4 million this year, up about 60% from the adjusted figure last year.

“We are dealing with high-net-worth individuals who like to spend money—that’s a great customer base, and our core asset is this customer,” says Mytheresa CEO Michael Kliger.

The customer focus has helped the company earn a consistent profit, with a gross profit margin of about 45% and an adjusted Ebitda margin of about 8%. Other e-commerce players at Mytheresa’s early stage of growth have been years away from turning a profit.

If Amazon. com is the “Everything Store,” Mytheresa has taken the opposite approach. The site carries about 200 brands, fewer than luxury e-commerce rivals Farfetch (FTCH) or Richemont’s (CFRUY) Net-a-Porter. A recent search for “black dress” on Mytheresa’s U.S. site yielded just over 2,000 results, versus more than 7,000 at Farfetch.

Mytheresa’s most loyal shoppers get access to personal shoppers, styling and concierge services, and other perks like invitations to exclusive designer events and parties.

CEO Kliger says there’s a fine balance between presenting products in a way that’s helpful to shoppers and overwhelming them with an endless assortment. His company is focused on curation and more-abstract shopping desires, he tells Barron’s.

Customers looking for a specific Burberry coat, Chloé handbag, or pair of Gucci sneakers are better served buying directly from the designer.

Mytheresa’s website and app, now set up for spring and summer, are currently promoting multibrand compilations including “sandal season” and “talking-point pieces.”

The unique edit, to use the fashion-industry parlance, stands out to customers. Some 90% of Mytheresa customers surveyed by Cowen analyst Oliver Chen said they were likely to recommend the site to a friend, and 75% of them browse it weekly. Nearly 50% of Mytheresa’s customers spend at least $30,000 on luxury goods annually, the survey found.

Investors have been far more stingy when it comes to Mytheresa stock. The shares trade for 2.8 times this year’s estimated sales, versus 8.2 times for Farfetch and 4.5 times for The RealReal (REAL)—both of which are losing money.

Mytheresa could rally as investors reconsider that valuation gap. J.P. Morgan’s Boss has a price target of $38 on the stock, 50% above its recent close.

For now, Mytheresa stock is a luxury play at a bargain price. The sale is unlikely to last.

My 1980 Volkswagen Rabbit died a hero’s death in the mall parking lot, a quarter of a million miles on the odometer, eating its own diesel engine under a titanic soot cloud. It was a catastrophic throttle condition called a runaway, I later learned, and had nothing to do with my having popped in a Hall & Oates cassette.

That car, my first, was ahead of its time, covering 50 miles on a gallon of fuel. Plus, a door handle broke every other month, fostering my social network of area junk men more than a decade before Facebook.

I thought of my beige beauty this past week after investment bank UBS published a financial teardown of a VW electric hatchback called ID.3. Volkswagen (ticker: VOW.Germany) says the new model marks “the third major chapter of strategic importance in the history of our brand,” behind the Beetle and Golf, aka the Rabbit at times. The profit analysis has implications for investors across the car industry.

Volkswagen suffered what you might call a reputation runaway six years ago, when it was caught cheating on emissions tests for diesel vehicles. To atone, it’s all-in on electric. On Friday, the company said that by 2030, electric vehicles would make up 70% of its sales in Europe—double its previous target—plus 50% each in the U.S. and China. There will be $19 billion spent through 2025, and 20 new models, including the ID.4 crossover and ID.5 sedan this year.

So can a large, committed, legacy car maker building an all-electric platform from scratch hope to catch up with Tesla (TSLA)? The answer is probably, maybe.

Today, manufacturing costs for a regular Golf are around $5,000 lower than for VW’s new electric vehicles, estimates UBS analyst Patrick Hummel, after picking though the latter’s LG Chem (051910.Korea) battery cells and other innards. But at the rate battery costs are falling, cost parity will be reached by 2025. “We think it’s a strong package that underpins the idea that leading legacy [manufacturers] can build competitive EVs in a cost-efficient manner,” Hummel wrote. But Tesla is still $1,000 to $2,000 cheaper on each battery pack, thanks to building them itself at scale.

If Tesla is the Apple (AAPL) of the new car world, there is still room for VW and others to be like Samsung Electronics (005930.Korea), according to Hummel. Among suppliers of electric powertrains and such, he is bullish on Aptiv (APTV), Valeo (FR.France), and Nidec (6594.Japan); among battery makers, he likes LG Chem and Contemporary Amperex Technology (300750.China). For semiconductors, he recommends Infineon (IFX.Germany). That last one is up 267% since I first wrote favorably about it in Barron’s six years ago

Consider two other points. Software, not batteries, will be the real battleground for car makers in the years ahead, predicts Hummel. There, Tesla reigns for now, and the others have yet to inspire confidence. There is more at stake than sleek dashboards. Software will be key to autonomy and over-the-air downloads of new, lucrative features. By 2030, software could double the lifetime revenue of cars, lifting operating margins for winning car makers from single to double digits.

Also, Hummel sees electric vehicles reaching more or less total market share by 2040, with fuel-burners becoming like landline telephones—leapfrogged altogether in emerging markets. And there are even more extreme forecasts out there.

Last week, I briefly mentioned a chat with Cathie Wood, whose Ark Innovation exchange-traded fund (ARKK) leapt 152% last year and is now at the center of a market debate over whether stocks like Tesla are rolling over or have more upside. (You can hear that conversation in this week’s Barron’s Streetwise podcast.) Wood predicts a plunge in battery costs, with mainstream sedans in 2025 costing thousands of dollars less in electric versions than gasoline ones. She expects 82% compounded EV growth through then. If she’s right, legacy car makers that aren’t yet moving at Volkswagen speed on electric had better step on the gas. (For more on Wood, see our profile here.)

We last heard from ViacomCBS (VIAC) CEO Bob Bakish in this space in mid-May, when his shares had begun to climb back from their pandemic low. They have quadrupled since then. I caught up with Bakish this past week.

Can his new Paramount+ streaming service thrive in a crowded field? Bakish says it is differentiated, with loads of live sports, movies, TV shows including major children’s franchises, and breaking news. He calls his free, ad-supported Pluto TV service an “entry point” for the new streaming ecosystem, which includes Showtime.

And Pluto is doing well on its own. “When we said at the beginning of 2019 that it would be a $1 billion business in the not-too-distant future, for sure, I thought people thought we were smoking something,” Bakish says. “But the reality is it’s going to be a billion-dollar business very soon, and then it’s going to keep going.”

Will movie theaters survive? Bakish plans to send films to theaters for shorter than traditional stays, based on his reading of box office degradation. “After 30 days and certainly after 45, most theatrical titles really aren’t doing any revenue,” he says. But he thinks the new approach can keep all constituents happy: “We know talent likes their films in the theater.”

ViacomCBS shares have now returned 88% since Bakish took over the combined company in December 2019, versus 24% for the S&P 500 index. He says his favorite part of the job is using assets to solve complicated problems and create value—shifting to unified advertising and distribution teams, for example, and getting his studio heads on board with streaming. “The proof is in the pudding,” he says, “in terms of taking a skeptical Wall Street market and turning them into, at least at this point, partial believers.”

Now, this is not “suitable” for work clothes!

Super sexy models swapping spit in a lusty menswear ad are making social media do a spit take over a company’s tongue-in-cheek ad.

Just short of stripping down to their birthday suits, well-groomed hotties posing for Suitsupply’s latest promotional campaign are kissing, licking and groping each other and calling it “The New Normal.” At least 10 scantily clad men and women are intertwined in an orgy-like lovemaking scene in the NSFW promo spread that was released Friday.

The campaign’s title and imagery are likely symbols of hope for a future with less social distancing since the rollout of COVID-19 vaccines is underway.

Glistening wet tongues, dripping saliva and bulging crotches steal the show, rendering Suitsupply’s newest threads nearly invisible in the photos. However, each shot does feature at least one man dressed in the fashion brand’s suit, sucking face with a near-nude woman.

Unsurprisingly, Twitter is cyber-spanking Suitsupply, comically criticizing the clothing pushers for pushing their “new normal” views of marketing onto the socially distancing public.

“I’m working from bed and really and truly just pulled the covers over my head. Too close in a pandemic!!!!!!!!!!!,” one cringing critic tweeted.

“I ain’t uptight, but the suitsupply ads gross me out,” a sickened social-media messenger wrote.

“I see the world is once again ready for Suitsupply’s incredibly inappropriately horny ads!” another finger-wagger typed.

So far, Suitsupply has not made a public statement regarding its controversial campaign. Although the provocative photos went viral, only time will tell what the snaps do for their sales.

But if watching folks tongue each other down with drool dripping off their chins doesn’t bother you, then by all means, suit yourself.

The separation allows Saks.com, which has about $1 billion in annual sales, to raise money to fuel its growth, the company said. E-commerce has experienced explosive growth during the coronavirus pandemic with several luxury retailers showing resilience.

“Luxury ecommerce is poised for exponential growth,” said HBC chief executive officer Richard Baker on Friday. “Saks is primed to win significant market share.”

HBC said few changes will be noticeable to customers. Saks Fifth Avenue will remain the brand name for both the stores and e-commerce business, and shoppers will be able to buy online and pick up their purchases in stores. They will also be able to make returns and exchanges using their Saks credit cards either at stores or online, the company said. The online business will oversee marketing and merchandising for both segments.

Venture-capital firm Insight Partners has put up $500 million for a minority stake in Saks.com, giving the business a $2 billion valuation. The money will be used to invest in faster shipping, easier returns and better customer service, Saks’ 40 brick-and-mortar stores will become a separate business known as SFA, which will remain wholly owned by HBC.

Marc Metrick, who was CEO of the combined Saks businesses, is set to become CEO of the new digital company.

Metrick touted the spinoff, adding: “As a standalone company, we are well-positioned to make the appropriate investments to drive exponential growth and deliver the same exceptional experience online.”

Former WeWork and Amazon exec Sebastian Gunningham is joining the e-commerce company’s board, and Saks veteran Larry Bruce has been appointed president of the SFA business, reporting to Baker.

HBC was taken private last year by a group of shareholders that includes Baker. HBC also owns the Hudson’s Bay department store chain in Canada, and the discount business Saks Off Fifth.

Insight Partners’ other investments e-commerce platform Shopify, social media site, Twitter and subscription meal kit service, Hello Fresh.

Fed chairman says economy is far from employment and inflation goals; he gives no sign the central bank would seek to stem rise in Treasury yields

WASHINGTON—Federal Reserve Chairman Jerome Powell reiterated his intention to keep easy-money policies in place but provided no sign the central bank will seek to stem a recent rise in Treasury yields, prompting them to rise further.

Stocks also sold off on Mr. Powell’s remarks Thursday during an interview at The Wall Street Journal Jobs Summit. The appearance came a week after a jump in Treasury yields driven by forecasts of stronger U.S. economic growth and inflation this year, among other factors.

“Today we’re still a long way from our goals of maximum employment and inflation averaging 2% over time,” Mr. Powell said Thursday during the interview.

Some analysts said his latest remarks did little to ease investor fears about rising bond yields.

“The market was looking for some more reassurance and didn’t get it,” said Krishna Guha, head of global policy and central bank strategy at Evercore ISI. Fed officials “don’t appear particularly concerned about the current level of yields, which in both real and nominal terms is significantly higher than it was two weeks ago.”

The yield on the 10-year Treasury note rose above 1.55% after Mr. Powell’s interview—its highest level since before the pandemic—up from 1.46% earlier Thursday and 0.92% at the beginning of the year.

Such rates influence many consumer and business borrowing costs. Following the run-up in Treasury yields in recent weeks, the average rate on a 30-year fixed-rate mortgage has risen above 3% for the first time since July, Freddie Mac said Thursday. That has started to weigh on applications to buy or refinance homes.

The Dow Jones Industrial Average lost 345.95 points, or 1.11%, to 30924.14 Thursday. The S&P 500 declined 51.25 points, or 1.34%, to 3768.47, the third consecutive session of declines. The Nasdaq Composite fell 274.28 points, or 2.11%, to 12723.47.

Meanwhile, oil prices rose Thursday after OPEC and a Russia-led coalition of oil producers kept most of their production cuts in place, surprising traders who had expected the group to increase output.

Mr. Powell’s remarks came at his last scheduled public event before Fed policy makers meet on March 16-17. He said the central bank will maintain ultra-low interest rates until its employment and inflation goals have been met, and will continue hefty asset purchases until “substantial further progress” has been made.

Recent evidence suggests the labor market is improving, but slowly. The Labor Department said Thursday that filings for unemployment benefits, a proxy for layoffs, rose slightly to 745,000 in the week ended Feb. 27, down from 927,000 in early January but more than three times their pre-pandemic levels. Mr. Powell noted that the U.S. has about 10 million fewer jobs than before the pandemic and said, “It will take some time to get back to maximum employment.”

The central bank has held its overnight federal-funds rate near zero since last March. It has sought to suppress longer-term rates by purchasing, since last June, at least $120 billion a month of Treasury debt and mortgage-backed securities.

Another factor fueling the recent rise in Treasury yields is growing debt issuance by the Treasury Department to finance a widening budget deficit. U.S. federal debt is projected to nearly double to 202% of gross domestic product by 2051, the Congressional Budget Office said Thursday.

As bond yields have risen, some investors have begun to speculate that the Fed could start to skew its asset purchases or holdings toward longer-dated instruments in order to keep borrowing costs low.

Asked Thursday about the climb in long-term rates, Mr. Powell said it “was something that was notable and caught my attention.” But he signaled no imminent policy response from the central bank.

“I would be concerned by disorderly conditions in markets or a persistent tightening in financial conditions that threatens the achievement of our goals,” Mr. Powell said Thursday. He added that the Fed is looking at “a broad range of financial conditions,” rather than a single measure.

“If conditions do change materially, the [Fed’s rate-setting] committee is prepared to use the tools that it has to foster achievement of its goals,” Mr. Powell said.

Steady progress in vaccinating people against Covid-19, combined with trillions of dollars of fiscal stimulus, have led forecasters to predict a quicker bounce-back in economic activity than they expected last year. Many market participants also anticipate that a burst of spending once the economy fully re-opens will push inflation above the Fed’s 2% target, a situation that in the past would have prompted tighter monetary policy.

But more than a decade of weak inflation led Fed officials last year to swear off raising interest rates in anticipation of rapidly rising prices. Mr. Powell said last week that the Fed doesn’t foresee lifting its benchmark fed-funds rate from near zero until three conditions have been met: a broad range of statistics indicate that the labor market is at maximum strength, inflation has hit its 2% target, and forecasters expect inflation to remain at that level or higher.

Mr. Powell said it’s “highly unlikely” that the Fed’s goal of maximum employment will be reached this year. But he was less clear about whether the economy could show enough improvement this year for the Fed to start reducing its monthly asset purchases.

“I’ve so far been able to not reduce it to an estimate of time. I mean, that will come, I think, when we can see that,” Mr. Powell said, referring to the standard that the Fed wants to meet before scaling back its asset purchases.

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