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Topshop's Stunning Collapse Proves No Retailer Is Too Big to Fail

This week everyone will be talking about whether creditors will approve a rescue plan for Topshop parent Arcadia, Revolve's initial public offering and new men's collections from Saint Laurent and Prada. Read our BoF Professional Cheat Sheet.
The Topshop flagship in London | Source: Shutterstock
By
  • Brian Baskin
BoF PROFESSIONAL

THE CHEAT SHEET

Topshop’s Fate Comes Down to the Wire

Topshop store | Source: Shutterstock

  • Topshop parent Arcadia's creditors will vote June 5 on a restructuring plan; CEO Sir Philip Green and a watchdog group are at an impasse over pension contributions
  • If the plan fails, Arcadia's brands could be sold off or liquidated; US Topshop stores are already slated to close
  • On Friday, Green was charged with four counts of misdemeanor assault in Arizona after a pilates instructor alleged he grabbed her on multiple occasions

Arcadia, which owns Topshop, Miss Selfridge and other struggling chains, employs 18,000 people in the UK and operates over 1,100 stores in dozens of countries. It's also woefully out of step with the modern retail environment. The company's merchandise and stores failed to keep pace with fast-fashion competitors like Zara and Primark, while flagship brand Topshop's minimal online presence opened it to attack by Asos, Boohoo and a crowd of other digital competitors. What's left should look familiar to anyone watching the unfolding retail armaggeddon in American malls and British high streets: under-trafficked stores with expensive leases, and angry creditors. Layered on top are the allegations against Green, from racial abuse to sexual harassment to the charges in Arizona on Friday. He's denied them all, but the headlines have no doubt contributed to plunging sales.

The Bottom Line: No matter what the outcome of Wednesday's vote, without radical reinvention, Topshop is a dead chain walking.  

Revolve Prepares to Finally Go Public

Revolve recently launched a private label brand with influencer Aimee Song | Source: Courtesy

  • Fashion e-commerce site Revolve plans to issue 11.8 million shares priced between $16 and $18 in an upcoming IPO
  • The company, which uses influencers to sell emerging designers' products, anticipates a valuation of $1.2 billion
  • Revolve filed to go public in October but investor concerns about its wholesale business model delayed listing

Revolve was founded in 2003, but it truly is a creature of the Instagram era. The site carries products coveted by millennial women, and then hires an army of influencers to flog them on social media. Revolve's size (nearly $500 million in net sales last year) masks some of the challenges it faces as a primarily wholesale business in an increasingly direct-to-consumer world. The number of brands using some variation on Revolve's model is growing by the day, and top-tier influencers increasingly prefer to shill their own lines over someone else's. Revolve has recently pivoted, partnering with macro influencer Aimee Song on a private label collection that gets the company deeper into the direct sales game.  The strategy shift may have been necessary to coax investors into supporting Revolve's IPO, which was announced in October but took nearly eight months to reach the finish line. 

The Bottom Line: Revolve's IPO should provide a good indicator of the reception the most recent class of digital native brands and e-commerce platforms are likely to receive as their initial investors look for an exit.

A Scattered Start to Men's Fashion Week

Saint Laurent men's Spring/Summer 2019 | Source: Indigital.tv

  • On June 6, Saint Laurent will show its men's collection in Los Angeles
  • Prada will show its latest men's collection in Shanghai on the same day
  • The Council of Fashion Designers of America ended its four-year experiment with a separate New York Fashion Week Men's; most major US men's designers are now showing in September or in Paris 
It's getting harder and harder to pinpoint where one season ends and the next begins. Saint Laurent and Prada will kick off the Spring 2020 men's shows on Thursday, days after Gucci's cruise show in Rome and Alexander Wang's  latest ready-to-wear show in New York. Top-tier designers can draw editors and buyers whenever they show, and veering off the official schedule means they won't have to share a spotlight (though Saint Laurent and Prada are presenting a tough choice). Taking collections on the road also bolsters key markets and builds a brand's story, whether it’s Prada courting Chinese consumers or Saint Laurent highlighting its association with LA.

The Bottom Line: The continued splintering of the men's calendar is a sign that the CFDA made the right call in pulling the plug on NYFW Men's as an independent event. 

COMMENT OF THE WEEK

Amazon boxes | Source: Shutterstock

"The fashion game created this situation when they wanted to save rent costs and not stock stores so much. They created this situation and now have to face the consequences." @mrdavidskilling, commenting on "Customers Love Free Returns. Here's How Brands Are Navigating the Costs"

The Week Ahead wants to hear from you! Send tips, suggestions, complaints and compliments to brian.baskin@businessoffashion.com

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