LONDON, United Kingdom — As other luxury brands shift their focus away from wholesale and scale up their direct-to-consumer channels, BoF has learned that Marc Jacobs is set to close its last remaining London store on Mayfair’s Mount Street. Other European retail outposts are to follow, multiple sources said. The details of which other stores will be closed are not yet known, although the LVMH-owned fashion house currently operates retail stores in Denmark, Italy, Norway and Luxembourg, according to its website. The Paris location on Rue Saint Honoré will remain open, according to sources familiar with the business.
A spokesperson for LVMH declined to comment on this story.
While Marc Jacobs will maintain a physical presence in London through its wholesale partnerships with multi-brand retailers including Selfridges and Harvey Nichols, the Mount Street closing is symbolic for the neighborhood. The area's transformation from Mayfair backwater to luxury ground zero, home to top brands like Céline and Balenciaga, was kicked off by the opening of Marc Jacobs in 2007.
The new closures are the latest in a string for the Marc Jacobs brand, which has, over the past four years, shut down all of its Marc by Marc Jacobs stores, as well as some main line Marc Jacobs locations. At present, Marc Jacobs' retail network consists of four Marc Jacobs stores, one Bookmarc bookstore and four outlet stores in the US, as well as international stores and outlets in countries including Japan, Malaysia and China.
The streamlining is part of a larger restructuring at the brand, which has endured losses since its founder and designer exited his post as women's artistic director of Louis Vuitton at the end of 2013. At the time, the Marc Jacobs label was said to be on track to spin off from parent company LVMH and complete an initial public offering that would put it on par with Michael Kors.
During LVMH’s annual meeting in April 2014, chief executive Bernard Arnault said the Marc Jacobs business was generating a billion dollars a year in retail revenue, thought to include royalties from its partnership with Coty, which manufactures and distributes Marc Jacobs fragrances.
However, Marc Jacobs’ consolidated retail revenues, not including fragrance, have more than halved in the past three-to-four years, dropping from around $650 million to about $300 million, according to a source familiar with the business. (Industry analysts have also published similar estimates.) A significant proportion — from a quarter to a third — of Marc Jacobs' retail sales are generated by outlets, where the brand’s clothing and accessories are sold at a discount.
The drop in revenue can be traced to 2015, when LVMH announced its decision to unify Marc by Marc Jacobs and the main collection under a single brand umbrella, with British designer Luella Bartley and (accessories guru) Katie Hillier — who were hired in 2013 to craft a refreshed identity and product offering for the company's second line — leaving their posts. (Hillier continued to consult on accessories.)
Previously, Marc by Marc Jacobs’ bags, with price tags often under $500, allowed the brand to tap the then-growing demand for accessible luxury brands, competing with rivals such as Longchamp and Michael Kors. Launched in 2001, Marc by Marc Jacobs was once considered one the most profitable fashion subsidiaries of LVMH, enjoying strong demand in the United States and Japan. The line once accounted for about 80 percent of the brand’s revenue, according to analyst estimates. Collapsing the mid-range and high-end labels seemed to have confused consumers.
The brand unification has resulted in store closures both Stateside and in Europe, including several on Bleecker Street in New York, the brand's Bookmarc outpost on Melrose Place in West Hollywood and a Marc by Marc Jacobs store on London's South Audley Street.
However, the closure of the London flagship indicates deeper problems within the business that go beyond the restructuring. For the past two seasons, Jacobs has completely stripped back his once-elaborate runway shows, presenting at the Park Avenue Armory, where he has used the bare wooden floor as the catwalk and school-assembly-style folding chairs for seating. The approach was couched in the press as a creative decision, but is also a way of cutting costs.
Chief executive Eric Marechalle, who joined from Kenzo in July, replacing Sebastian Suhl, has been tasked with bringing back some "fun" into the brand, according to a source. Marechalle was the business brains behind the successful revamp of Kenzo, which he ran alongside co-creative directors Carol Lim and Humberto Leon. Marc Jacobs Beauty, which is part of the LVMH-controlled incubator Kendo, and its fragrance line continue to generate significant revenues.
LVMH has an 80 percent stake in Marc Jacobs. The rest of the company remains in the hands of the designer and his business partner Robert Duffy. Ownership of the brand's trademark is equally split between the group, Jacobs and Duffy.
Disclosure: LVMH is part of a group of investors who, together, hold a minority interest in The Business of Fashion. All investors have signed shareholders’ documentation guaranteeing BoF’s complete editorial independence.