Warby Parker and Wall Street’s Verdict On DTC | This Week in Fashion, BoF Professional

This week, Warby Parker shares began trading in what was probably the most anticipated of this year’s spate of fashionIPOs.

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The direct listing of the US eyewear brand saw it go public. There was no selling of shares. The stock rose 36 percent from its $40 reference price on Wednesday, the first day of NYSE trading. Warby Parker’s market capitalisation is now above $6 billion — double the $3 billion valuation it was given after raising $245 million in August 2020.

Just as there’s no single reason why consumers choose one brand over another, there isn’t a neat answer to why investors rushed to buy shares of Warby Parker as well as a handful of similar recent IPOs, such as On Running and Olaplex, while steering clear of others. A strong brand identity is one factor that unites us all.

When a company’s stock goes up, it reflects investors’ underlying assumption that the best is yet to come. For a hot brand like Olaplex, that’s an easy story to tell: the California-based beauty brand known for its luxury hair care products has built a strong following through its direct-to-consumer business, in addition to wholesale partnerships with Sephora and beauty distributors that sell its products to salons. The company went public on Thursday, and now has ample cash to expand into other categories. Chief executive JuE Wong told BoF that Olaplex’s sustainable packaging initiative likely helped its IPO stand out from other market debutantes.

Investors believe Warby Parker has a strong identity, not only in business circles. Many businesses have a positive image of themselves. “the Warby Parker”Their industries. The track record for the many is not good. fashion start-ups that have mimicked Warby’s approach is decidedly mixed, the disruptor brand challenging the slow-moving incumbents remains a compelling narrative.

A.k.a Brands, parent company of fast, is a better comparison. fashionbrand Princess Polly, had the price and size of its IPO reduced last week. Shares plummeted as soon as they were made public. A.k.a. Brands is profitable, but it has had a harder job convincing investors that its rapid growth will be sustainable. Online fast fashionBrands can see a rapid rise and then disappear when a cheaper, faster competitor comes along. Therefore, the company will need to work hard in order to keep its Gen-Z customers.

BoF was informed that A.k.a Brands had released a statement stating that they are “confident in our growth strategies in the quarters and years ahead and in our ability to redefine retail for the next generation.”

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Some investors approach Warby Parker with the same caution. It has a disruptive vision but also plans to expand its business by opening hundreds more stores. This puts the brand in direct competition with EssilorLuxottica. Earnest Research says that Lenscrafters, Sunglass Hut and Lenscrafters are both part of the conglomerate. Each has 13 per cent of the US eyewear market. Warby’s share is 7 percent, up from 4 percent in 2017.

Warby Parker is already experiencing losses and will need to take on the incumbent. While net revenue increased from $272.9 to $370.5 million in 2018, while losses rose from $22.9 to $55.9million (though it only lost $7.3 Million in the first six months). (Warby Parker is currently in a quiet period, and declined to comment.

Warby Parker’s share price has remained close to its post-IPO level. Its performance over the next weeks and months will give a better idea of the market’s perception of the brand. When that verdict comes in, Warby Parker’s listing will serve as a more definitive ruling on the wider DTC space, and whether investors will sign onto DTC’s affinity for prioritising growth over profit for the long run.

Editor’s Note: This article was revised on 1 October, 2021 with updated figures regarding Warby Parker’s losses.

THE NEWS IN BRIEF

FASHION BUSINESS AND THE ECONOMY

Gucci, Louis Vuitton, Valentino, Hermès among 44 brands to show at Alber Elbaz tribute closing Paris Fashion Week. Getty Images

Gucci, Louis Vuitton, Valentino, Hermès among 44 brands to show at Alber Elbaz tribute. Each of the participants — a mix of established luxury houses and smaller labels like Thebe Magugu and Wales Bonner — will create one bespoke look “inspired by his legacy or a special take on an iconic silhouette,” a statement from Elbaz’s label AZ Factory read. The tribute will be displayed in a livestreamed event that will take place on Oct. 5.

Luisa Via Roma announces $152 Million investment and plans to go public. The deal was made by Style Capital, a private equity fund that owns a majority share in Australian label Zimmermann as well as a minority share in Italian brand MSGM. Andrea Panconesi (current chairman and chief executive) will retain 60% of the business.

Canada Goose expands into footwear. The luxury outerwear brand’s November release of the $1300 winter boot will help it expand into a new category at an important time in its business. After seeing sales rise in China and online during the pandemic, the brand anticipates that it will surpass $1 billion in revenue this year.

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Renzo Rosso, OTB chairman, expects a 20 percent organic growth in the coming years. Rosso stated that he has. “very ambitious targets”The company has a number of goals for the future, including further acquisitions and a public offering, as the industry recovers after the Covid-19 pandemic. OTB is the owner of brands like Diesel and Maison Margiela and took over Jil Sanderser in March.

Parade raises $20M in a new round, bringing its valuation to $140 Million. The direct-to–consumer intimates brand will use the funds raised in Series B by Stripes to expand its product lines, open brick and mortar pop-up shops, as well as make new sustainability commitments.

Boohoo and H&M warn that supply chain problems are affecting European retail. Boohoo Group Plc lowered its forecast for sales and profitability while Hennes & Mauritz AB’s revenue growth decelerated as high shipping costs and global supply chain disruption continued to challenge European clothing retailers.

Chinese textile prices could rise due to power cuts. Planned shutdowns — due to China’s struggles with severe electrical shortages — in industrial hubs like Jiangsu, Zhejiang and Guangdong could send prices of textiles and garments up in coming weeks, according to Fibre2Fashion.

California has signed the Garment Workers Protection Act. The bill will remain in force “corporations accountable and [recognise] the dignity and humanity of our workers,”In a statement, Governor Gavin Newsom stated that. The law will ensure hourly wages for California’s garment workers in lieu of piece-rate pay, which often amounts to wages well below the state’s $14 minimum wage.

BEAUTY BUSINESS

Advent-owned hair care firm Olaplex valued at $13.6 billion in IPO. Instagram/@olaplex.

Advent-owned haircare company Olaplex valued at $13.6 million in IPO. Instagram/@olaplex

Olaplex, a hair care company owned by Advent, was valued at $13.6 billion in IPO. The hair product maker’s sales grew 90 percent year-over-year in 2020, while adjusted net income rose to $131 million over the same period from $100.5 million a year earlier, according to a recent regulatory filing.

Estée Lauder winds down designer fragrance licensing division. The beauty group’s Aramis and Designer Fragrances (ADF) division has licensing contracts with Donna Karan, Michael Kors, Tommy Hilfiger and Ermenegildo Zegna, all of which will come to a close in June 2023. Capri-owned Michael Kors already announced that it had signed a 15 year deal with EuroItalia (which counts Versace as one of its partners)

PEOPLE

Everlane names Andrea O’Donnell chief executive. Getty Images.

Everlane names Andrea O’Donnell chief executive. Getty Images

Everlane names Andrea O’Donnell chief executive. The direct-to-consumer brand’s founder Michael Preysman will step away from the CEO post to take on a sustainability-focused role as executive chair and “climate activist.” O’Donnell joins from Decker Brands, parent of labels such as Ugg and Teva, where she was president of the Ugg brand.

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Vanessa Kingori MBE’s takes new roles at Condé Nast. The former publishing director of British Vogue — as well as both the first-ever female business lead at the title and Black publisher at Condé Nast Britain — has been named chief business officer of Condé Nast and Vogue European business advisor. In her new roles, Kingori will lead UK commercial teams and across all Condé Nast brands as the company continues to restructure.

Kering appoints Thierry Marty as president of North and Southeast Asia Pacific. In the newly-created position, Marty will oversee the French luxury group’s development in markets including Japan, South Korea, Southeast Asia, Australia and New Zealand. He will be based in Seoul and report to Kering’s group managing director Jean-François Palus.

Burberry appoints a chief digital and analytics officer. CP Duggal, who most recently led American Express’ digital and analytics organisation, will join the executive committee. He will report to Marco Gobetti (Burberry chief executive), and will eventually report directly to his successor, once Gobetti joins Ferragamo.

MEDIA AND TECHNOLOGY

ByteDance is reportedly launching a cross-border e-commerce platform. Getty Images.

ByteDance is said to be launching an international e-commerce platform. Getty Images

ByteDance reportedly plans to launch a cross-border ecommerce platform. Chinese media outlet The Passage reported that the firm, which owns Tiktok and Douyin among other apps, plans to unveil an e-commerce app for international consumers in October, which would be an attempt to take on Alibaba’s marketplace AliExpress.

Macy’s sues to stop Amazon billboard ad near NYC flagship store. Macy’s said that Kaufman Realty Corp. was in conversation with a “prominent online retailer,”It believes that Amazon is the company it was referring to, several months before the contract for the billboard was terminated in August. An agreement from 1963 prohibits competitors from advertising there.

Joan Kennedy compiles this list.

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