BoF Logo

The Business of Fashion

Agenda-setting intelligence, analysis and advice for the global fashion community.

What Happens When Big Companies Buy Cool Ones

Zalando’s acquisition of Highsnobiety is just the latest in a spate of deals in which a company seeking relevance snapped up a smaller, hipper entity in the hopes of reaching a savvier, often younger, consumer. But does chasing cool ever work?
A collage of lifestyle editorial shoots featuring Highsnobiety collaboration jumpers and baseball caps.
High-end streetwear platform Highsnobiety has been acquired by Zalando. (BoF Collage/Instagram)

This week, Zalando, one of Europe’s leading fashion e-commerce players, acquired a majority stake in Highsnobiety, the streetwear blog that has established itself as an agency of cool through content, commerce and brand consulting. The financial terms of the deal were not disclosed, though it’s possible that Highsnobiety was valued between $180 million and $250 million.

It’s obvious why Highsnobiety wanted to sell: Zalando offered an exit after more than 15 years, as well as an opportunity to more robustly build out its fast-growing commerce business.

The real question is why Zalando wanted to buy Highsnobiety. It’s clearly not about the money, at least not directly: Zalando generated more than $12 billion in sales in 2021, and neither Highsnobiety’s revenue nor the cost to operate it will have much of an impact on the retailer’s balance sheet. But the value Highsnobiety could generate is significant. Zalando, a mass-market apparel player, has been working to gain a foothold in high fashion. Highsnobiety will essentially serve as an in-house consultancy that can help introduce the retailer to the younger luxury customers it wants to reach. (Over the past few years, Highsnobiety’s creative agency, which advises brands and retailers on content, has become a larger part of the overall business and is growing, according to Highsnobiety co-founder and chief executive David Fischer.)

The fact that Zalando and Highsnobiety are both based in Berlin and run with a German sensibility is another plus.

The deal also reflects a prevailing trend in M&A in the fashion industry, with a spate of established firms snapping up businesses that cater to younger and/or savvier consumers. Just a few weeks ago, Spanish beauty conglomerate Puig bought Byredo in an effort to reach the growing demand for niche fragrance over designer. Management firm Marquee Brands, which owns names like Martha Stewart and Ben Sherman, recently acquired the polarising streetwear label Anti-Social Social Club with an aim to better understand the Gen-Z customer. And a few months back, Farfetch scooped up Los Angeles-based high-end beauty purveyor Violet Grey in an effort to establish authority as it makes a major push into the category.

The reality, however, is that 70 to 90 percent of mergers and acquisitions don’t deliver value, according to Harvard Business Review, because of the way the two companies are integrated after the merger. HBR didn’t single out deals like Zalando’s, where cultural cachet rather than pure revenue and profits was the driving rationale, but the failure rate for these sorts of deals may be even higher.

Oftentimes, the culture of the more innovative business is lost, and the cool factor dissolves. A classic case is Banana Republic. When it was acquired by Gap in 1983, it was a chic outfitter of safari clothes, subsequently transformed into a wear-to-work brand designed to compete with Ann Taylor. But despite some success in the 1990s and more recently, its identity remains blurry and performance is inconsistent. The American beauty group Estée Lauder, which found great success with its purchase of M.A.C., has struggled more frequently in recent years with acquisitions. For instance, five years after buying Becca Cosmetics in 2016, it decided not to resell it, but to simply shut it down, citing poor performance.

It is quite possible for a brand to lose its magic once it’s absorbed by a larger entity, and Highsnobiety fans took to social media to express their concerns. “What a bummer,” said @marcjanssenberlin, a personal shopper. “Puh, I don’t know if this is a good deal for @highsnobiety !?! When they can/will do their [independent] business in the future, then okay. If not, then I would call it a fail…” added @sven_moye.

On the other hand, strong brand management can result in success. VF Corp. has managed to build out The North Face and Vans without, for the most part, damaging their reputations with their core customer bases. Perhaps that’s why Supreme, the ultimate “cool” brand, chose VF as its partner when it “sold out” at a $2.1 billion valuation. Thus far, the queues in front of its Lower Manhattan store remain just as long.

There are signs that Highsnobiety will maintain quite a bit of independence from Zalando: not only editorially, but physically. (They are not merging offices.) In the best-case scenario, Highsnobiety will help to polish up Zalando’s brand, while growing the Highsnobiety business and maintaining some of the magic that made it so special in the first place.



High-end streetwear platform Highsnobiety has been acquired by Zalando.

Zalando buys Highsnobiety. The German fashion e-tailer has taken a majority stake in the high-end streetwear platform in a bet on the combined power of content and commerce.

Last mile delivery start-up wins LVMH Innovation Prize. Toshi, Sojin Lee’s white-glove delivery service, has landed contracts with Chanel and Dior and is plotting further expansion.

LVMH’s Bernard Arnault ‘optimistic’ economy can avoid recession. The French luxury goods giant was on a “very good track” regarding its performance for the first six months of the year, Arnault told reporters during a tech event in Paris.

Norway warns H&M, Norrøna over misleading sustainability claims. The Norwegian Consumer Authority has ruled outerwear brand Norrøna cannot use data from the Higg Index to back up environmental claims, dealing a blow to the industry rating tool amid a broader crackdown on greenwashing.

LVMH invests in lab-grown diamond start-up Lusix. LVMH Luxury Ventures, the French luxury conglomerate’s private equity arm, has acquired a stake in Israeli lab-grown diamond start-up Lusix alongside other investors in a $90 million funding round.

H&M sales jump as shoppers return after the pandemic. The world’s second-biggest fashion retailer posted a bigger than expected rise in sales three months from March. Net sales were up 17 percent year-on-year, or 12 percent when measured in local currencies, at 54.5 billion crowns ($5.4 billion) in its fiscal second quarter.

EU cartel raids target designers proposing sales periods, discount changes. The European Commission, which did not name the companies nor the countries in which it conducted the dawn raids, said the firms may have violated EU cartel rules against restrictive business practices, which include price-fixing.

Russia’s Wildberries selling Zara clothes online despite Inditex halting operations. The region’s e-commerce leader confirmed a TASS news agency report that Zara items were being sold on the site, highlighting the difficulties companies face in keeping control of their brands.

Forever 21 takes third crack at China with new brick-and-mortar store. The brand said on social media platform WeChat that it would open a store “in June” at Jingjiang Impression City shopping centre in Taizhou, a third-tier city in the eastern province of Jiangsu, which neighbours Shanghai.

Gap Inc. and Athleta invest $1 million in footwear and apparel start-up Saysh. The San Francisco-based apparel retailer invested in the label which was founded in June 2021 by the American Olympic sprinter Allyson Felix and her brother Wes Felix. The investment was part of an $8 million Series A funding round, led by Gap and consumer fund Iris.


Revlon's flesh makeup line.

Revlon files for bankruptcy as online beauty contest takes toll. Known for its nail polishes and lipsticks, the 90-year-old company listed assets and liabilities of between $1 billion and $10 billion in a court filing on Wednesday. The company has also been hit by supply issues, made worse by the Covid-19 pandemic.


Sidney Toledano.

Sidney Toledano becomes chairman of the Institut Français de la Mode. The chief executive of LVMH Fashion Group will work alongside dean Xavier Romatet, the former chief executive of Condé Nast France, in a supervisory role at the French fashion school.

Nicholas Daley wins the BFC/GQ Designer Fashion Fund 2022. The London-based menswear designer was awarded £150,000 ($188,000) to invest in business development for his namesake brand. Daley will also receive ongoing mentoring via the British Fashion Council (BFC), as well as legal and business support over the next 12 months.

Swarovski names first external chief executive. The Austrian maker of crystal sequins, jewellery, collectibles and precision optical equipment, has hired its first chief executive from outside the company’s founding family. Alexis Nasard previously helmed the Czech shoe and accessory retailer Bata.

Mytheresa eyes China expansion with new China, Asia Pacific president. The luxury e-commerce giant has appointed Steven Xu as president of China and Asia Pacific. In the role, Xu will be responsible for consumer-facing activities in the region, as well as building out a team, the company said.


Bracelets on display in the window of a Cartier store.

Amazon teams with Cartier on joint lawsuit against counterfeiting. The companies are suing eight Amazon sellers and an individual operating with the handle Phym9y3v on social media for peddling fake Cartier goods on the e-commerce giant’s platform, marking the latest move from Amazon in its war against counterfeiters.

Compiled by Joan Kennedy.

© 2023 The Business of Fashion. All rights reserved. For more information read our Terms & Conditions

More from Financial Markets
A financial lens on the fast-changing fashion sector, including markets, investors and deals.

L Catterton, the private-equity firm with close ties to LVMH and Bernard Arnault that’s preparing to take Birkenstock public, has become an investment giant in the consumer-goods space, with stakes in companies selling everything from fashion to pet food to tacos.

Any fashion company that is contemplating going public needs to have not only the product and brand fundamentals right but also a business strategy that can easily be understood by the markets, writes Imran Amed.

view more

Subscribe to the BoF Daily Digest

The essential daily round-up of fashion news, analysis, and breaking news alerts.

The Business of Fashion

Agenda-setting intelligence, analysis and advice for the global fashion community.
The State of Fashion 2024
© 2023 The Business of Fashion. All rights reserved. For more information read our Terms & Conditions, Privacy Policy, Cookie Policy and Accessibility Statement.
The State of Fashion 2024