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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Streetwear is wearing thin. Sales at Puma rose just 4 per cent last year; the German sneaker maker lost more than 20 per cent of its market capitalisation after its earnings fell short of analysts’ estimates last week.
Companies as well as clothing are being cast aside. First VF Corporation sold Supreme to EssilorLuxottica for $1.5bn, not even three-quarters what it paid for it in late 2020. Then French luxury group LVMH flogged its stake in Off-White, founded by late designer Virgil Abloh, declining to disclose for how much.
Call it the tyranny of fashion. Mainstream brands thrive on exposure — like Reiss, inundated with orders for a frock worn by Kate Middleton in her engagement photos to the UK’s Prince William. Niche brands like those in streetwear do better with less. Supreme, once so highly regarded by the cognoscenti it was able to sell branded bricks, found corporate ownership and overexposure were anathema to its street roots.
Luxury brands, maybe because they understand the power of scarcity, play the niche market best. Supreme has pulled off shortlived collaborations with Tiffany & Co and Burberry, which last week cheered investors with a less-bad-than-expected slide in sales over the festive period.
Collabs are more hit-and-miss for the smaller partner, be they in streetwear or other niches. Look at Vans, with partners over the years ranging from National Geographic to Nasa. Its “timeless fashion” Old Skool trainers lost their cachet when they shod more than the cool kids; in the six months to September, sales at the brand owned by VF Corporation dropped 16 per cent year on year.
The trick is to move on to the next must-have before the existing one goes mainstream. But smaller brands lack the capital to scale up quickly and keep innovating. A newcomer’s invention only has a year before big brands march in on its turf, a fraction of how long it used to take, according to Bernstein analyst Luca Solca.
Staying relevant is easier for big brands, which can also adopt trends quickly. Like or loathe it, online fast-fashion retailer Shein has proved a master at this, as testified not least by the slew of lawsuits from independent artists accusing it of ripping off their designs.
For their smaller peers, following suit means investing in innovation; instead, the temptation is to cut costs. Sportswear purveyor Under Armour reckons its restructuring will cost $140mn-$160mn, or equivalent to nearly one quarter of last fiscal year’s already shrunken marketing budget. That may please investors in the short term, since they seek mostly profit. Shoppers’ tastes are harder to gauge.
