LONDON, United Kingdom — Back in 2006, when I first spoke with experts and investors from across the fashion industry about backing emerging fashion businesses, there was a lot of enthusiasm, but very little action. Many looked at these kinds of deals, but nobody actually put their money down. In this context, French luxury conglomerate PPR’s announcement, earlier today, that it has acquired a 51 percent stake in emerging London label Christopher Kane is particularly significant. Indeed, it’s been a very long time since a major luxury group has taken a majority stake in a young designer fashion brand.
In 2005, roughly five years after PPR’s much-hyped investments in Stella McCartney and Alexander McQueen, the general consensus amongst the fashion cognoscenti was that these investments were underperforming. McQueen and McCartney had only a few stores each in the world’s main fashion capitals and were a long way from being businesses that could contribute to the bottom line of their parent company. They required huge capital injections to grow — and their future was uncertain. And, as if to further bolster the argument that building fashion brands from the ground up wasn’t something large conglomerates were particularly good at, PPR rival LVMH’s only from-scratch fashion investment — in Christian Lacroix — resulted in the brand’s sale after more than 15 years of poor results.
But fast forward a few more years and today, both Stella McCartney and Alexander McQueen have grown into medium-sized businesses with over €100 million in annual revenue each by pursuing business models that fit, respectively, with their unique brand DNAs.
McCartney has taken her name and created what one fashion expert described to me as a business that could one day become the “Calvin Klein of Europe,” a lifestyle brand with significant licensing revenue across multiple product segments. Regular readers of BoF will recall that Calvin Klein chief executive Tom Murry acknowledged to me that their core fashion business is “not a business that contributes to the bottom line and it probably never will be.” But that’s okay, as the licensing business contributes more than enough and it’s one model that works.
As for McQueen, a company that many thought was on the very edge of survival after the unexpected death of its founder, this business, too, has found its feet financially, while quick decision making by PPR executives and the impressive work of creative director Sarah Burton have ensured the preservation of the brand’s DNA and enabled the company’s expansion into new businesses such as McQ.
The common lesson here is that it can take many, many years for a young designer fashion brand to find its footing. The fact is, it’s hard to scale a fashion business from virtually zero. Emerging fashion brands still need to define and articulate their DNA, establish the core products that the business will be built upon and put into place solid teams and structures before they can expand. The best fashion investors recognise this and are willing to wait up to ten years to see their investments bear fruit.
This is why today’s announcement is so significant. While PPR must be pleased with its new brand asset, the biggest winner is Christopher Kane, who has found a partner who believes in him and his talent, and has the patience to allow his brand to develop and discover the path that works for him. In the fast-paced, high-stakes world of global fashion, this kind of investment from one of the world’s leading luxury groups is the holy grail — and Kane is highly deserving of the endorsement.
But make no mistake. There is a lot to be done. While Kane has a seemingly endless well of creativity to draw upon, he will need to be paired with the right commercial team to establish a solid underlying business model for revenue growth, merchandise his collection for profitability (a few core items that can be carried over each season) and build a successful retail model that includes e-commerce.
But first, there’s that one small matter of a website. Today, www.christopherkane.com takes you to a blog called “the ramblings of a software guru.” I’ve joked about this with Christopher in the past. Perhaps now, with the time, space and team made possible by the PPR investment, Mr Kane will focus some attention on his digital presence too.
Imran Amed is founder and editor-in-chief of The Business of Fashion