The Business of Fashion
Agenda-setting intelligence, analysis and advice for the global fashion community.
Agenda-setting intelligence, analysis and advice for the global fashion community.
The luxury e-commerce retailer reported a £5.9 million ($7.9 million) loss for the fiscal year ending 31 January 2020, just weeks before the pandemic radically shifted the retail landscape.
The company pointed to investments in operations, technology and infrastructure to explain the loss, but revenue growth also continued to slow. Sales hit £430.5 million in 2019, a 16 percent year-on-year increase compared to 27 percent in 2018 and 44 percent in 2017.
The results reflect a key challenge facing luxury e-commerce businesses: finding scale while maintaining profitability in an increasingly competitive landscape. Matchesfashion’s bigger rivals Net-a-Porter and Farfetch face similar dilemmas.
Matchesfashion’s struggles led to the departure of former CEO Ulric Jerome in August 2019. (Jerome’s successor Ajay Kavan, a former Amazon executive, joined the company last March, just as the pandemic hit Europe).
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The luxury retailer provided little information about how it has performed over the course of the last 12 months. It noted that demand “was significantly down” early on in the crisis, but subsequently recovered.
Yet its physical operations suffered substantially. It was forced to cancel events, close its physical locations in London during lockdowns and press pause on plans to open a physical presence in New York, resulting in the furlough of 29 percent of employees.
On the other hand, Matchesfashion secured an additional £35 million in funding from investor Apax Partners in April 2020 to help deal with the impact of the pandemic. And over the course of the last 12 months, online sales of luxury goods have skyrocketed as pandemic jitters and lockdowns shifted consumer behaviour, accelerating market growth by about five years, according to Bain & Co. At this point it’s unclear exactly how much Matchesfashion was able to benefit.
Fast-growing start-ups like Hettas, Saysh and Moolah Kicks created sneakers designed specifically for active women. The sportswear giants are watching closely.
The companies agreed to cap credit-card swipe fees in one of the most significant antitrust settlements ever, following a legal fight that spanned almost two decades.
In an era of austerity on Wall Street, apparel businesses are more likely to be valued on their profits rather than sales, which usually means lower payouts for founders and investors. That is, if they can find a buyer in the first place.
The fast fashion giant occupies a shrinking middle ground between Shein and Zara. New CEO Daniel Ervér can lay out the path forward when the company reports quarterly results this week.