Hungarian brand Nanushka has plenty to celebrate this year. On September 7 it hosts its first ever runway show in New York and, a few days later, it will unveil a new location for its flagship in the city. In October the brand will inaugurate a pop-up Nanushka Café with Galeries Lafayette in Paris, a spin-off of the cafés that can be found inside all of its stores, and launch an entry level line of merchandise, including handmade coffee sets, bottles and aprons. Then it will open the doors of the Nanushka Apartment, a 100 sq metres suite on top of its Mayfair store in London that can be rented for a holiday in the city in full Nanushka style.
But most of all, founder Sandra Sandor and chief executive Peter Baldaszti are celebrating steering the brand to safety after a severe supply chain crisis that plunged the label into the red just two years ago.
“Crisis management was more demanding and challenging than anything I had to do in my life,” says Baldaszti on a video call from Spain, where he is on holiday with Sandor and their child. “The last couple of years have been a rollercoaster for us. There was so much work done internally in this period — consolidating the house codes, consolidating our merchandising strategy, looking at what our strengths and weaknesses are — but we didn’t really have the chance to show it to the outside world. It felt like 1725607199 it was the time to make some confident and bold moves.”
Sandor founded Nanushka as an accessible luxury brand in Budapest in 2005, after graduating from London College of Fashion. For the next 12 years she largely managed the label by herself, growing it into a €1mn business known for sleek faux leather dresses and minimalist separates. Baldaszti came on board at the end of 2016, bringing an investment from Agoston Gubicza of GB & Partners Investment Management and a more aggressive expansion plan, which included influencer marketing, the opening of the brand’s first international store in New York and the launch of a menswear line. In just under four years Nanushka grew to €25mn in sales. The brand had expectations to keep growing at a fast clip, forecasting €50mn in sales for 2022.
What happened next is in part unique to Nanushka and in part extremely common for fledgling independent labels. The brand’s supply chain, which was initially mostly based in Hungary, wasn’t able to keep up with the accelerating demand. At the same time, many of Nanushka’s European manufacturers were swooped up by more established luxury labels with larger and more lucrative orders which, after the supply chain crisis caused by the pandemic, started focusing on onshoring production.
“It was a perfect storm,” continues Baldaszti. “We lost around €25mn in sales because we weren’t able to produce goods on time. We were in the middle of opening our China stores and there were months where we didn’t actually have the products on the shop floor.” Revenue dropped down to around €20mn and 2023 was “a significant lossmaking year.”
Baldaszti and Sandor have spent the past two years reshuffling 80 per cent of their supply chain — which is now diversified across Hungary, Romania, Portugal, Italy and China — and cutting costs. As part of their turnaround strategy, they have also adjusted their pricing to a more “competitive” level and worked on rationalising wholesale accounts, with the goal of having 55 to 60 per cent of revenue from direct-to-consumer operations. (In May, Nanushka announced that it was outsourcing wholesale distribution to brand-building company Tomorrow, but the project is still in its early stages due to “operational complexities,” according to Baldaszti.)
“We managed to turn it around, but it proved to be a hundred times more difficult to fix a company than scaling it,” admits Baldaszti.
Today the brand is back to breaking even and is on track to reach €35mn in sales for 2025. The goal is to reach €100mn in sales by 2028, says Baldaszti, but the pursuit of growth for its own sake is over. “It cannot be growth over everything else. It’s going to be more balanced in terms of channels, product categories and geographies, because our growth was neither of these in the previous chapter,” he says. Cue the hospitality and new category launches planned for the autumn and a new focus on handbags with the presentation of two new models during the show in New York.
Baldaszti’s new sober approach comes as accessible luxury brands face a more challenging market, with aspirational shoppers tightening their purses and a wholesale crisis that has seen major players such as Matchesfashion, Farfetch and Yoox Net-a-Porter going into administration, being sold to avoid insolvency and continuing to accumulate losses. Independent labels including Christopher Kane, Mara Hoffman, Dion Lee, The Vampire’s Wife and Victoria/Tomas all closed down in the past two years.
“In wholesale as well as online, customers are trading down to more accessible price points. You can see there are a lot more customers buying on markdowns,” says Baldaszti, adding that’s not the case for shoppers visiting Nanushka’s flagship stores. “There is this full price resistance, especially in the online space across customers, so I think brands, especially in the aspirational space, have to be very mindful of the prices they are asking customers to pay. It’s going to be critical in the next couple of years to be competitive.”
In 2020, Baldaszti and GB & Partners Investment Management’s Gubicza founded Vanguards, a fashion group focused on brands in the “€1mn to €20mn annual revenue space.” Today Vanguards includes Nanushka, Hungarian label Aeron and Italian brand Sunnei. In an interview with GQ last year, Baldaszti said the group was planning to grow to include 10 brands by the next five years. Does he still think that’s the right category to invest in?
“I think that independent brands with a unique product, that [are] culturally relevant with a modern creative approach will still have a great opportunity going forward,” he offers. “You really have to nail down the price point, the size of the range and the target market. Even if the company is a pioneer in the space in terms of creativity, you need to have a very strong merchandising focus to succeed. And that’s usually the biggest issue with emerging brands.”
Both Sandor and Baldaszti are eager to see the efforts of the last two years pay off, starting with the runway show this Saturday — a “huge milestone” for the brand, but also a reflection on longevity.
“New York is a city that’s quite sentimental for us because our first international presentation was there in 2018, and we also opened our first international store there in 2019,” says Sandor. “When I was thinking about this celebration I wanted to think about why Nanushka was relevant in these past 20 years and how it’s going to be relevant in the next 20 years. It’s a meditation on that.”
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