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Are Sky-High Valuations Back in Fashion?

The fundraising landscape is still generally conservative, but companies like Alo Yoga are reportedly seeking multi-billion dollar valuations.
Alo Yoga is allowing its corporate employees to convert part or all of their paychecks to cryptocurrency.
The fundraising landscape is still generally conservative, but companies like Alo Yoga are reportedly seeking multi-billion dollar valuations. (Courtesy)

Alo Yoga wants to be fashion’s next multi-billion dollar behemoth.

At least, according to a Reuters report this week, which claimed that the Los Angeles-based athleisure brand is “exploring a potential investment” that could value the company at as much as $10 billion. A spokesperson for Alo Yoga declined to comment.

Of the athleisure upstarts that are vying for pieces of the ever-growing sportswear market, Alo has managed to distinguish itself with its fashion-forward, celebrity-loved (Kendall Jenner, Katie Holmes and Taylor Swift are fans) approach to the category. Still, a $10 billion valuation is one-fifth of the market capitalisation of Lululemon, the category leader, with over 650 stores worldwide compared to Alo’s 40-plus.

Whether Alo actually nabs such a high valuation remains to be seen. As last month’s Birkenstock IPO proved, the gap between a company’s perception of its worth and the market’s can be quite large. But it’s undeniable that, nearly two years after the direct-to-consumer bubble started leaking air, money is flowing into fashion and beauty brands again.

Skims, the Kim Kardashian-founded intimates and basics brand, raised $270 million in July at a $4 billion valuation. While Birkenstock’s IPO was considered a disappointment, its $8.6 billion market capitalisation after its first day of trading represented a substantial increase over what L Catterton paid for it two years earlier. In November 2022, ultra-luxe skin care brand Augustinus Bader was valued at $1 billion.

Those big-ticket valuations on the surface feel reminiscent of another era of fashion start-ups, the 2010s, a period that brought forth a slew of frothy valuations. Fashion and beauty companies like Allbirds, The RealReal and Rent the Runway raised hundreds of millions of dollars, reached unicorn valuations ($1 billion) without turning a profit.

Fast forward to today, and the risks of investing on the sizzle — the idea — rather than the steak — the financials — have been laid bare. Rent the Runway, once a unicorn, today has a market capitalisation of just over $33 million. While The RealReal initially saw its share price surge just after going public in 2019, its stock price has fallen by over 95 percent since then. Allbirds’ market capitalisation is over $137 million, with a stock price that’s fallen over 96 percent since its IPO.

Those sorts of trajectories, coupled with increasingly uncertain circumstances in the wider macroeconomic environment, have made for a more conservative investment landscape. Venture capital firms today are prioritising profitability above all else when it comes to choosing their next portfolio companies. Many start-ups are having trouble finding funding at all — look at Gen-Z favourite intimates brand Parade, which sold to little-known strategic Ariela & Associates International in August.

Companies like Alo Yoga and Skims that get attention from investors today have the sizzle and the steak. Both operate in sectors for which demand is either constant (underwear and other basics, in the case of Skims) or growing (Alo’s athleisure has been on a steady incline for the past decade and was further buoyed by the casualisation of the pandemic).

“These are more stable products, and people are willing to bet on a brand that has heritage and is utilitarian,” said Gary Wassner, founder and chief executive of consultancy Hilldun Corporation.

Patience is also a virtue. Alo Yoga was founded 16 years ago, well before most of the DTC brands that staged IPOs in the last few years. They’ve proven their products can hold consumer interest through trend cycles (Birkenstock has an even longer track record, dating its origins to 1774). Contrast that with Allbirds, which was founded in 2015, nabbed a $1 billion valuation in 2018 and went public in 2021, just in time for its minimalist sneakers to fall out of fashion.

In a conservative environment, there’s an opportunity to nab a big valuation if there’s a solid, dependable business behind it – with one notable exception of course.

“Unless your surname is Kardashian, these are decade-long, sometimes multi-decade, journeys, it really is a marathon,” said Daniel Gulati, founding partner at the venture capital firm Treble Capital. “If people are willing to build their businesses from the ground up and make quality decisions day in, day out, over the long-term, things should work out.”



Asos is considering a sale of Topshop, a one-time stalwart of the British high street, which it acquired in February 2021.

Report: UK’s Asos is exploring the sale of Topshop. Asos bought the Topshop brand in 2021 from the administrators of Philip Green’s collapsed Arcadia group, along with its Topman, Miss Selfridge and HIIT brands for £265 million ($321 million).

Prada reports third quarter retail sales up 10 percent. Sales in North America were broadly stable, falling 1 percent in a market where rising interest rates and slower economic growth have provoked steep declines among some rivals.

Hugo Boss sees strong sales despite slowing consumer demand. The fashion maker has weathered the drop in European consumer sentiment so far, benefiting from luxury customers trading down to its refined casualwear.

Selfridges owner to give up control of €23 billion empire. Shareholders called on Signa Holding GmbH founder Rene Benko to cede his role as chairman of Signa’s advisory board and to give up his voting rights to German insolvency expert Arndt Geiwitz. The move is contingent on shareholders agreeing to fund the conglomerate’s turnaround.

VF Corp. withdraws its annual forecast due to slowing demand. Shares were down 4 percent in extended trading after VF Corp. also reported a lower-than-expected second-quarter profit.

Canada Goose cuts sales forecast on rocky China recovery. The Toronto, Ontario-based company expects fiscal 2024 revenue to be between C$1.20 billion ($864.30 million) and C$1.40 billion, compared with its previous forecast of C$1.40 billion to C$1.50 billion.

Matchesfashion saw a slight revenue drop in 2022. The company attributed the decline to external factors including Brexit-related logistical challenges, rising interest rates and declining consumer spending.

Asos expects sales to slump to continue as it is hit by near £300 million ($370 million) loss. Analysts have expressed fears that the online fashion site will need to raise new cash — potentially through the sale of its Topshop brand — with net debt including leases now at £648.5 million ($800 million), up from £533 million a year before.

Amazon punished its own sellers to limit Walmart’s reach, according to the FTC. Walmart’s 2016 acquisition of reportedly triggered fears at Amazon that would be able to offer shoppers lower prices online. This kick-started Amazon’s strategy of removing sellers’ offers from the Buy Box if shoppers could find the same products at lower prices on

Next raises guidance on strong third quarter sales. Full-price sales rose 4 percent from August through October, £23 million ahead of its previous expectations.

Zalando cuts its 2023 sales forecast as demand stays weak. Zalando now expects 2023 revenue to fall between 0.5 percent and 3 percent, having previously guided to a 1 percent decline at worst and a 4 percent gain at best.

Shein buys Missguided brand from Britain’s Frasers. Shein will acquire the intellectual property and trademarks of Missguided, while Frasers will retain its real estate and employees which have now been integrated into Frasers’ fashion division.

Bangladesh wage protests turn deadly. Tens of thousands of garment workers clashed with police this week amid protests over low wages that have left factories damaged and at least two dead.

Skims unveils partnerships with Swarovski and the NBA. The NBA tie-up will come to life in NBA marquee events while the new collection with Swarovski will include crystal-embellished Skims staples, like mesh dresses and bodysuits.


Estée Lauder is falling behind rivals like L’Oréal, even on its home turf.

Estée Lauder lowers outlook on China weakness and Israel-Hamas war risk. Net sales in the most recent quarter fell 10 percent. The company has been floundering in its crucial travel retail business in Asia due to weaker-than-expected demand.

Reliance Retail to take over Sephora India. As part of the partnership with LVMH-owned Sephora, Reliance Retail will take over the operations of Sephora’s 26 stores from Arvind Fashions Limited, and begin work to expand Sephora’s presence in the country.

E.l.f. Beauty raises outlook after sales surged 76 percent last quarter. The company also saw strength in skin care, where sales more than doubled from a year ago. E.l.f. acquired Naturium, a skin care brand founded by influencer Susan Yara, in October and remains open to future acquisitions, Tarang Amin said.

True Beauty Ventures and Unilever Ventures bet on fragrance. The companies have announced a minority investment in clean fragrance brand The 7 Virtues, the first time either venture capital firm has made a fragrance investment..

Aurelius Group is in talks to buy the Body Shop, according to a Reuters report. If completed, the deal is expected to value the Body Shop at a lower price than the £400 million to £500 million suggested in some reports.


Ivan Bart

Ivan Bart, IMG Models president who pushed for diversity, has died. Over a decades-long career, Bart helped steer the careers of some of fashion’s most famous faces. Under his oversight, IMG represented models including Kate Moss, Naomi Campbell, Hari Nef and Ashley Graham.

British Fashion Council announced its ‘New Wave: Creatives’ Class for 2023. The annual list, which highlights 50 of “the most innovative and inspiring young creative talents” across the fashion industry, includes British makeup artist Alice Dodds and Ghanaian visual artist Sarfo Emmanuel.

Blumarine appoints Walter Chiapponi as creative director. The former Tod’s creative director will oversee the design team and replaces Nicola Brognano, who had held the top creative role at the Italian brand since 2020.

Milan Djacic will lead Vogue Adria. The Belgrade-based media leader will be the first editor-in-chief of the Croatian, Serbian and Slovenian edition of Vogue magazine.

Sarah Burton and Jonathan Anderson are among nominees for BFC Designer of the Year Award. The British Fashion Council also announced the shortlist for its BFC Foundation Award, which recognises a designer who has a major impact on global fashion. The winners will be named at The Fashion Awards on Dec. 4.


A pile of Vogue magazines covers spread over a table.

Condé Nast is set to lay off 5 percent of its workforce. The publisher of titles like Vogue and Vanity Fair announced in a note sent to employees that it would lay off around 270 employees, primarily in its video division following a restructuring.

UK, US, EU and China sign declaration of AI’s ‘catastrophic’ danger. Twenty-eight governments signed up to the “Bletchley declaration” on the first day of the British government’s AI safety summit. So far, however, there is little international agreement over what a global set of AI regulations might look like.

Alibaba banks on aggressive singles day pricing to recoup sales. Brands were told to offer the best price of the year on Tmall or Taobao for the blockbuster shopping event, or risk losing the traffic and support given to event participants.

PR firm Science Magic shuts down. The company has gone into voluntary liquidation and has terminated its staff effective immediately. The company once represented clients such as Versace, Canada Goose and Max Mara.

Compiled by Yola Mzizi.

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