CHECKING IN ON FASHION’S DIGITAL FUTURE...
The RealReal reports fourth-quarter results on Feb. 22; Farfetch and Mytheresa report on Feb. 25
Both companies say they are on track to become profitable, Farfetch as soon as this year
Several digital competitors have gone public or plan to this year, including Poshmark, Thredup and Mytheresa
The RealReal and Farfetch were at the vanguard of the last wave of fashion technology IPOs, selling investors on the idea that the luxury sector was ready to embrace resale and Amazon-style e-commerce. Both have largely succeeded in making their case, with shares of the two companies trading near record highs as sales soared during the pandemic. The final piece of the puzzle is turning a profit. Farfetch says it will be in the black by year’s end, while The RealReal has longer to go, potentially needing to double annual revenue to $2 billion first, according to Cowen.
The clock is ticking, as both companies have seen profitable rivals (Poshmark in resale, Mytheresa in e-commerce) stage IPOs this year. The RealReal is opening stores – a good way to secure access to the best secondhand inventory – and taking other steps to distinguish itself as rivals like Vestiaire Collective forge partnerships with luxury brands. Farfetch has its joint venture with Alibaba and Richemont, plus its brand factory, New Guards Group.
The Bottom Line: Both companies need to keep an eye on the competition, even with their commanding head starts in their respective markets. Consumers have more choices for fashion marketplaces and resale sites than ever, even if few are as big or well-funded.
... AND ITS BRICK-AND-MORTAR PAST
Macy’s reports fourth-quarter results on Feb. 23; Victoria’s Secret owner L Brands on Feb. 24
L Brands is expected to split Victoria’s Secret from Bath & Body Works later this year
Macy’s is closing stores and testing smaller locations outside malls
For this pair of ailing mall fixtures, it’s all about changing the narrative. L Brands is further along in that respect. Victoria’s Secret has new leadership, new marketing and, soon, a new swimwear collection. Sales were better than expected last quarter, and newfound price discipline boosted profits. This strategy is geared toward getting the brand in good shape financially ahead of a potential spinoff later this year. Meanwhile, Macy’s is attempting to shed its image as an anchor to dying malls, testing small store concepts with “Market by Macy’s” and “Bloomie’s,” and closing dozens of underperforming locations. For now, though, the chain’s fate remains tied to shopping centres, and therefore to a speedy vaccine rollout.
The Bottom Line: The focus at both brands has been to update outdated and bloated store networks. But their success likely hinges on pairing healthier brick and mortar with a robust online presence. Look for more details on that front this week.