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BFD Expert Voices - Retail Deals

BFD Expert Voices

Brunello Cucinelli is having a banner 2022, with revenue projected to increase 28% from €712 million last year. And its eponymous founder expects the Solomeo, Italy-based luxury brand to continue that momentum in 2023, with sales expected to increase 12%, he tells Richard via a translator.

Why it matters: Both numbers well outpace the prediction by Bain & Co. that personal luxury goods' sales will grow 22% this year and somewhere between 3% and 8% next year. 

Details: The billionaire creative director says analysts continually predicted slowing growth for much of this past year, but it never materialized for his company.

In fact, the luxury brand beat its own projections, he says.

Italy's strong supply chain provides a competitive advantage, which will then support a strong 2023, Cucinelli argues.

By the numbers: Since its IPO in 2012 Brunello Cucinelli's market cap has ballooned from €500 million to €4.9 billion.

It recently traded at about €72 per share, near its 52-week high and well above its 52-week low of about €39.

Between the lines: Cucinelli says he is happy to remain an independent publicly traded company and has no desire to acquire other brands, though he notes that he does have a fiduciary duty to consider offers.

The company, which began on the notion of brighter cashmere colors, did buy a stake in its key cashmere supplier, Cariaggi Lanificio, earlier this year.

Driving the news: Cucinelli was recently named the recipient of the Neiman Marcus Award for Distinguished Service in the Field of Fashion due to the brand's 20-year relationship with the retailer and for its purpose-driven mission.

The company, for example, pays the craftspeople in its manufacturing facilities 20% more than its white-collar staff to bring dignity to the work and attract the next generation of artisans, Cucinelli says.

What they're saying: "Neiman (Marcus) has always stood for a beautiful brand and even at tough times ... the business was still there," Cucinelli says, citing the U.S. retailer's loyal customer base, its care for visual details, and its adherence to selling luxury goods.

The founder says his brand was first introduced to American shoppers by the late Fred Pressman, the former chairman of Barneys.

Since Barneys' bankruptcy, Neiman Marcus has essentially replaced it, he says, and it is Brunello Cucinelli's largest wholesale account in the world

The intrigue: Even during Neiman Marcus' darkest moments financially, Cucinelli says it was worth the risk of shipping goods to it because he believed the multi-brand retailer would ultimately find investors.

If anything, the bankruptcy strengthened the relationship, he says.

The bottom line: Despite turmoil and uncertainty in the world, the high-margin luxury business appears set to remain resilient.

1 big thing: Brunello Cucinelli's very good year

Executive chairman Brunello Cucinelli of his namesake luxury brand delivers a speech.

Lanvin, the Paris-based French luxury brand, made its debut on the New York Stock Exchange today under the ticker LANV, an event some 134 years in the making since its founding in 1889, Richard writes.

In a strong showing, its shares are up nearly 47% to $14.55 in morning trading.

Why it's the BFD: In an arid IPO market, how investors respond to the offering will be instructive for the year ahead. 

Be smart: The public market may be strained, but the luxury goods sector is booming in 2022 with the sale of personal luxury goods projected to increase 22%, per Bain & Co., as noted above.

Flashback: Earlier this year, Lanvin and its China-based parent, Fosun International, agreed to merge with and go public via SPAC Primavera Capital Acquisition Corporation (NYSE: PV).

The deal valued the French luxury label at an enterprise value of $1.5 billion at the time.

Earlier this week, the two companies said that deal was approved by Primavera shareholders at a shareholder meeting on Dec. 9.

Details: Lanvin proceeded with its plan to go public even as others either delayed or backed out of their own IPOs because the luxury group was confident investors would value the business on its own merits and see the overall growth of the luxury market, says Joann Cheng, Lanvin's CEO.

For Lanvin, "an IPO is not a purpose, it's a milestone," she tells Axios.

It also considered the traditional IPO route, but Primavera had a solid reputation and group of investors behind it, Cheng says.

In addition, a New York IPO gave it brand exposure in one of the world’s fashion capitals and a gateway to the U.S. marketplace.

Meanwhile, she went on to note the company has raised $150 million in fresh capital, which will largely be invested in its existing businesses.

That includes the brands Sergio Rossi, Wolford, St. John Knits and Caruso in addition to Lanvin.

It also entails expanding its retail footprint, adding new product categories and increasing its digital presence, Cheng says.

What's next: While it's in no rush to do so, Lanvin also plans to build a pipeline for future acquisitions, Cheng says.

But buys would not be of brands that compete with its existing businesses, Cheng says.

Instead, the company would target categories such as leather goods and young urban brands to attract a more youthful demographic, she says.

By the numbers: For the six months that ended June 30, Lanvin said revenue grew 73% year over year to €202 million.

To be fair, Cheng says that the growth is off a fairly low revenue number.

The bottom line: "There's lots of low-hanging fruit," Cheng says, without investing in its business or making acquisitions.

She emphasized the biggest misperception was that Lanvin is a Chinese company when it's actually a truly global luxury group. 

2. The BFD: Lanvin pops

Photo by Elise HARDY/Gamma-Rapho via Getty Images

Trendio, a video shopping app that launches today, plans to raise a Series A in 2023, founder Alex Perez-Tenessa tells Richard exclusively.

Why it matters: Trendio is an AI-driven video shopping app that will appear on both mobile phones and Roku, to merge content and commerce on connected TV. 

Details: Proceeds will be used to fund the company's AI roadmap and category and geography expansion, Perez-Tenessa says.

He adds that Trendio will also increase the number of content and creators and market the service to customers, but declined to comment on the amount.

Perez-Tenessa was the former VP of Amazon Prime Video in the U.S. and the head of beauty at CVS.

Flashback: To date, the company has raised $3 million in seed money from Madrona as well as angel investors Ventures, Fab Co-Creation Studios, Kima Ventures, and Gaingels, among others.

What they're saying: "With new beauty brands coming out almost every day, customers need help understanding which ones are worth trying and what makes them different," Perez-Tenessa says.

"There needs to be more than generic descriptions from online stores or social media," he says.

"Trendio will be able to deliver personalized advice to every customer by leveraging video AI and live events where customers can interact directly with the experts," he notes.

The company makes money by earning a commission on generated sales.

3. Exclusive: Trendio plans 2023 Series A

Illustration of three cellphones, each with a "like" icon, in a shopping cart.

⚖️ California, Illinois and D.C. attorneys general have appealed a ruling by King County Superior Court Judge Ken Schubert of Washington state that denied a preliminary injunction that would prevent Albertsons from paying a $4 billion special dividend to shareholders. The fight continues…

🥛 Shares of Oatly, the Swedish oat milk company, are trading around $1.37, floating very close to the delisting “danger zone” — when share prices fall below $1 for an extended period of time.

The company, which went public on the Nasdaq in May of last year, priced its IPO at $17 apiece and its shares closed at $20.20 on its first day of trading.

🛒 One, a Walmart-backed fintech startup, plans to launch its own version of buy now, pay later “as soon as next year,” CNBC reports.

The venture, which is majority owned by Walmart, is intended to be used by Walmart’s shoppers on its website and in stores, as well as at other retailers.

❌ Oscar de la Renta, the New York-based fashion house, says that it doesn’t plan to return to New York Fashion Week, experimenting instead with other formats and off-season shows and prioritizing profit over market share, the Financial Times reports.

4. Retail therapy

Illustration of a paper shopping bag wearing a clay mask and cucumber slices with a jar of mask clay next to it

• Basecamp Research, a London-based provider of protein products, raised $20m in Series A funding. Systemiq Ventures led, and was joined by Valo, Blue Horizon, True Ventures and Hummingbird Ventures. www.basecamp-research.com

• Heyday, an expert skin care startup, raised $12m in a Series B extension led by existing investor Level 5 Capital Partners. This comes nearly two years after it raised an initial $20m Series B. https://axios.link/3Wm8li5 

• Bansk Group agreed to buy Red's All Natural, a Franklin, Tenn.-based brand of frozen burritos and breakfast sandwiches. www.redallnatural.com 

• Hillenbrand, a global industrial company, has agreed to sell its Batesville business, a provider of burial and cremation products, to PE firm LongRange Capital’s affiliate for $761.5m, including an $11.5m sub-note. https://axios.link/3uSJJ4R 

5. Retail transactions

• Honest Co, the personal-care company that actress Jessica Alba founded, has named American and General Mills vet Carla Vernón as its new CEO, succeeding Nick Vlahos on Jan. 9. Vlahos will remain on Honest’s board. https://axios.link/3WofSwG 

6. It's Personnel

Welcome back, Retail readers! Richard has fresh reporting from Lanvin after its IPO this morning. See more below.

🚨 Save the date: The Axios BFD lands in San Francisco on May 10, 2023.

🍰 What we're eating: Kim is getting her fill of baklavas and spanakopita (spinach pies) during her almost yearly holiday trip to Athens, Greece.

🙏 Big thanks to editor George Moriarty and copy editor Mickey Meece for today's edits.

Thank you for reading Retail Deals! Please share with your friends, family and luxury aficionados.

December 15, 2022

1 big thing: Brunello Cucinelli's very good year