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Fashion, luxury and lifestyle news aggregator - March 2024

Posted: 02/04/2024

Fashion giants falter: retailers face turbulent times 

Luxury clothing retailer, Matchesfashion, has announced it is to enter administration and cut 273 jobs (almost half of its workforce). Matches is home to some of the world’s biggest luxury names, including Gucci, Prada, and Yves Saint Laurent, as well as being known for championing smaller up and coming brands.

Matches was acquired by Mike Ashley’s Frasers Group in December 2023 for £53 million from private equity firm Apax Partners. Despite additional funding, trading has continued to decline, and Frasers has said it is unwilling to fund a turnaround after the business ‘consistently missed its business plan targets…and made losses’.

The retailer has been struggling in recent years, making a £33.5 million loss in the year to January 2023 and closing some of its London stores. Frasers reported that the funds needed to keep the business running would be ‘far in excess’ of what is viable. Redundancies are being implemented to allow the business to continue trading whilst sale discussions are ongoing. Like many retailers, Matches has felt the effects of ‘high inflation’, a ‘high interest macro environment’, and the pressures on the wider luxury market which has slowed as wealthier shoppers are hit by rising costs.

Meanwhile, Ted Baker filed a notice of intention to appoint administrators, which is expected to result in store closures and job losses. It follows a tumultuous few years for the retailer, which previously issued profit warnings and accounting mishaps, axed hundreds of jobs, and raised £100 million to bolster its balance sheet. Parent company, Authentic Brands Group, said the business has ended up with a ‘significant level of arrears’. It is reported that Ted Baker will continue to operate as normal during the administration, as it looks for a new partner to uphold the brand.

High street woes continue. SuperDry has hired restructuring advisors Teneo as it explores cost-saving measures, including a potential company voluntary arrangement and restructuring plan. The retailer previously engaged PwC and Interpath Advisory to examine its debt-raising options and to draw up a cost-cutting plan. In January, it posted widening losses, as sales fell 23% in the year to 28 October 2023, and adjusted pre-tax losses increased from £13.6 million to £25.3 million over the same period.

The latest updates add to an ongoing period of struggle for the embattled retailer, which sold its intellectual property in South East Asia in October 2023 in a bid to boost funds. Earlier this year, it was also announced that chief financial officer, Shaun Wills, will be stepping down. SuperDry’s battles have been similarly credited to a ‘backdrop of macroeconomic uncertainty’ including a ‘challenging retail market, unseasonable weather and underperformance of its wholesale segment’.

Digital retailer N Brown, which owns brands such as JD Williams, Simply Be, and Jacamo, and in which Frasers has a 20% stake, has also confirmed that around 35 staff are at risk of redundancy as it undertakes a business transformation programme to streamline operations. The company recently posted a 9.3% drop in sales, although its profit expectations remain on track. This follows on the heels of the Body Shop, which appointed administrators earlier this year to oversee an insolvency process, with some stores already shut and hundreds of jobs at risk.

As the fashion industry landscape continues to evolve, these latest developments serve as a cautionary tale for both luxury brands and high street retailers. We may be seeing a broader slowdown in the luxury goods market, and the unfortunate question seems to be who will join the growing list of British retail casualties.

Red carpet rivalry

Luxury brands have been fighting for the spotlight on the red carpets of Hollywood’s award season. The most coveted of ceremonies, the Oscars, is the most-watched awards show, drawing in 19.5 million American viewers earlier this month (the Golden Globes drew in an audience of just under half that earlier this year), and the fashion world flocked to Los Angeles in a bid to capitalise on brand exposure. As fashion news director of InStyle magazine, Eric Wilson, commented, ‘runway shows don’t have the same impact as they once did…one red carpet hit at the Oscars is the equivalent to a year’s worth of marketing for a designer’.

The luxury labels were also present in the days leading up to the Oscars – Louis Vuitton threw a Thursday night fete, Chanel hosted a Saturday evening dinner at the Polo Lounge, and other pre-Oscars events were put on by the likes of Armani, Prada, Versace, and Saint Laurent. The luxury conglomerates were in attendance at the afterparties, including Gucci, which co-hosted an exclusive house party and gave guests custom monogrammed duffle bags from its new Valigeria Fluo collection.

The opinion that fashion brands have ‘taken over Oscars week’ is therefore perhaps no surprise, but with all the dealmaking and brand ambassador partnerships that require stars to wear their labels at high profile events, it appears that independent designers are struggling to make it onto the red carpet. This year, Lily Gladstone wearing a gown showcasing indigenous designers and honouring her position as the first Native American nominee was described as ‘the most meaningful fashion moment of the night’.

Custom-made and archival looks were predicted to take centre stage. Cherie Balch, owner of online vintage designer archive Shrimpton Couture, saw a 200% increase in requests from stylists for vintage pieces, citing the drive for sustainability. Some of the rarest or custom-made pieces are said to be made available for the Oscars in ways they are not for other award ceremonies. The costs, which can be exorbitant, are typically met by the fashion houses hoping to reap the rewards of the exposure generated.

The fusion of fashion and entertainment is not new – indeed, we have seen it recently with the Super Bowl. Given the success of the Oscars for luxury brands, and the viewership numbers for the Super Bowl, perhaps a Super Bowl red carpet will be up next?

UK retailers lead the charge in boardroom equality

The FTSE Women Leaders Review, an annual government-backed business-led framework, reported that 40% of FTSE 350 board positions are now occupied by women, and half of the FTSE 100 companies have now met, or are on the way to achieving, the 40% target. Interestingly, the highest ranked companies for UK female board representation were retailers, including Burberry (55.2%), Marks & Spencer (51.3%) and Next (50.6%).

However, listed fashion retailers still lag behind the wider FTSE 350, with an average of 37% of board roles held by women. Similarly, most of the women on listed fashion company boards are in non-executive roles, with only 19% occupying executive C-suite positions (only 21 are in CEO roles in the FTSE 350).

The figures are reported against the backdrop of International Women’s Day, which took place on 8 March, and several brands celebrated, including French group L’Oreal which launched its new campaign, ‘Never your fault’, designed to fight against street harassment. UK retailer John Lewis also partook by inviting designers, producers and emerging women-led brands to join ‘John Lewis & Sisters’ and have their products stocked for Christmas.

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Penningtons Manches Cooper LLP