Deacquisition The Latest Trend In Haute Business
Luxury groups like, LVMH and Kering, are shedding non-blue chip labels which means a possible new future for London-based McQueen company.
Some pinpoint the start of the current movements in corporate high fashion to two particular moments: the first, in 1982, when Karl Lagerfeld was hired by the Wertheimer brothers to reinvent Chanel. Then, a forgotten to time company with only a few perfume licenses in operation, and then the reinvigoration of Louis Vuitton via Marc Jacobs in the late 90s. Both launched an industry-wide movement of resurrecting old, mainly European, brands and modernizing them for a profit. Some tries were failures, but when it worked, like in the case of Lanvin, the profits were immense.
This corporate model, rooted mostly in Milan and Paris, resulted in the construction of Liechtenstein-like luxury states—deeply rich, sovereign principalities of high design mixed with high finance. These were the French powers of LVMH and Kering (known as PPR, then Gucci Group); in Italy, the Prada Group and Armani, who organized his universe into a conglomerate-like structure. In Switzerland, it is Richemont. By the early 2000s, with vast resources and reach, these groups started to acquire smaller designers who showed promise and growth potential, which in turn grew their empires. At the time, these groups became lauded champions of independent designers. Knights of the day that could swoop in, buy up a promising young company, and bring it back to their lush kingdom behind the high stone walls of the group. As a result, a new princess method pipeline, for the most talented or profitable, had formed. Start a company, get some press, marry one of the big conglomerates, and you would be fine.
And then the business of fashion shifted again. There were more designers in a crowded marketplace. Fewer independent stores. The rise of e-commerce. 9/11. Social media. Covid. Now, it’s the generally destabilized global order. The cost to scale a fashion company has become harder, more expensive, more treacherous, as high fashion itself has transmuted from a quiet, artisan-led industry, into an arena of brash entertainment and mass media.
Today, these conglomerates appear to be ridding themselves of any fashion business that is not a one billion-dollar “unicorn.” Important independent designers, who were bought during the previous acquisition sprees of the early 2000s and mid-2010s, have fallen out of favor with the big groups over the past decade. Christopher Kane, Stella McCartney, New York-based Altuzarra, were, in a rather nice gesture for haute business, sold back to their namesakes. A little more ruthless were the deacquisitions of Off-White after its founder, Virgil Abloh’s, death. Now, there are credible rumors of the offloading of the New York-based Marc Jacobs brand to Authentic Brands Group (ABG). ABG, who specializes in distressed fashion companies, is the same firm that bought the beleaguered Barney’s empire in 2019, selling the profitable bits and then licensing the Barney’s New York IP to its staunch competitor Saks Fifth Avenue. ABG is a masculine-in-tone, fashion group that owns mainstream brands like Nautica, Reebok, and Juicy Couture. In a fashion context, it’s a placid business on the surface. But, in practice, they have proven themselves to be more akin to mercenaries operating in the Sahel.
That history leads us to present day, with the announcement that there is a credible drumbeat that Kering is looking to offload the McQueen label, which it bought in 2001, a deal led by then Gucci designer Tom Ford and executive Domenico de Sol.
At the time, Alexander McQueen was entering the third phase of his career: his first saw him as the bad boy upstart, his second as a more controlled designer after refining himself in the fires of haute couture via Givenchy. His third final, act would see a harmonious mix of his two former selves, one part theatrical transgression and one part technical craftsman of off-kilter beauty. In 2010, at 50, McQueen committed suicide alone in his Mayfair flat, distraught over the death of his mother and high on a cocktail of drugs. In hindsight, the designer’s death demarcated the end of a period in fashion where creativity underpinned the industry. McQueen’s longtime assistant, Sarah Burton, carried on for the house, and during her tenure, fashion only became more corporatized and influenced by Hollywood and a forming social media elite. But Burton also oversaw real growth at the company and brought a lightness to McQueen collections that, while showstopping, were weighted with the uncomfortable exchange of perversity and the sublime.
Today, there is a trend of hyper-concentration on top portfolio performers only, and any fashion asset that does not hover around that one billion mark are seemingly being let go. The tide is shifting from one of consolidation to corporate Balkanization, and McQueen, as a company, now finds itself caught in the headwinds of this inverted way of business.
The brand itself rests on the pillars of couture-level technical know-how, historical reference, beauty, transgression, and theatricality. It’s an intoxicating mix, but one that also seems to have a financial ceiling. Revenues are reported around $580 million at current exchange. Impressive, but small in comparison to its Kering stablemates like Gucci ($8.3 billion) and Bottega Veneta ($1.83 billion).
Things can possibly go two ways:
Kering conducts a careful search for the right buyer, not just procuring the highest bidder—someone who understands the brand and doesn’t feel the need to stretch it to a stratospheric valuation. The company deserves a soft landing, not just a push out the door, making it fend for itself against the harsh economic realities of the fashion trade. Maybe a British billionaire can take over, return the collection to England, and remoor the brand to its Savile Row tailoring and gritty, cinematic roots. But that, fearfully, may be romantic optimism.
What would be a shame would be the sale to a mass-market concern that only wants the name recognition to move t-shirts and subpar handbags, like a European-style Michael Kors. If that were to happen, then fashion will have lost a large stone out of its crown. McQueen is one of the few modern-born brand that’s comprised of the clay that can potentially rival the heritage prestige factor of Chanel or Loewe in the future.
To work inside this new reality of business means a realization that the industry has collectively made a 20-year error in the assumption that the apparatus of high fashion could foster and undergird the weight of commonplace billion-dollar companies. In hindsight, what should have been known is that high fashion is a more considered game.