Versace’s fit with Capri Holdings, the much-hyped American luxury conglomerate, always felt to me like a square peg in a round hole — a flamboyant maker of Italian ready-to-wear and haute couture operated by a US company known for its ubiquitous sporty accessories. So rumours that Capri has put Versace up for sale after only six years feel inevitable. I hear it’s Prada Group’s acquisition, if Prada wants it, which could make sense. A return to the Milanese fold.
Capri is rumoured to also be shopping around Jimmy Choo, once a London-based luxury brand renowned for its handmade shoes. That would leave Capri as a holding company only for Michael Kors. Its hoped-for merger with rival Tapestry, rejected by US anti-trust regulators, left both companies weaker. Tapestry recently cut a deal to sell Stuart Weitzman for $105 million — a fraction of the $574 million it paid for the shoe brand in 2015. If Tapestry sells off Kate Spade, where revenues are falling, that leaves it with only the Coach brand.
It’s fair to say that efforts to build a US luxury goods conglomerate are faring poorly as Europe’s LVMH, Richemont and Kering go about the business of scooping up fabled labels to goose them with cash, creative development and marketing prowess.
Even the latest efforts of newly emerging groups such as P180 and Authentic Brands Group’s Authentic Luxury appear to be sidestepping the intensive formula that built Europe’s luxury titans. Instead, they are collecting intellectual property rights and driving sales to proprietary technology with nary a word about craft or passion.
Americans can’t seem to figure out that luxury recipe, which is practically published on publicly traded Kering and LVMH websites. Those companies’ business is to deploy creativity at each label while nurturing the back of house with supply chain logistics and financial prowess.
The US has certainly developed fabulous luxury fashion brands that compete with the best European labels, including The Row, Oscar de la Renta, Tiffany, Carolina Herrera, Thom Browne, Tom Ford, Altuzarra and Alden Shoes. These American luxury brands are often surviving on shoestring budgets, producing ready-to-wear offerings by dint of a lucky fragrance or sunglasses, or by sheer tenacity. Pressing too hard for fast growth can leave them cash-strapped or bankrupt. Tory Burch will tell you that going slowly is the way to build an empire.
Versace may not be officially for sale, but reports of a buyout from Capri build. We lay out the key priorities for a potential new parent company.
What we haven’t managed to do is form an opportunistic group with the might and the will to compete with Europe’s conglomerates in luxury brands’ long-term development — the support that gets a label through a rough patch and raises it in public consciousness. Why not?
I asked Jean-Marc Bellaiche what it is about Americans and luxury brands. He worked for years in the US at Tiffany and is currently chief executive of Printemps in Paris. He pondered our Puritan origins for a moment, but noted that patience might be the missing factor.
“It takes time to build a luxury brand,” Bellaiche says.
Patience may be in shorter supply in America these days than luxury conglomerates. Our investors keep selling off their acquisitions on five to seven year horizons, which is the strategy of private equity and venture capital, not luxury groups. Under these criteria, Kering would be selling off Gucci, which has been in a tailspin, rather than rebuilding it.
Luxury dreams in a Silicon Valley setting
Interluxe Holdings — does anyone remember them? Private equity group Lee Equities funded them with fanfare in 2014, announcing plans to build an American luxury fashion conglomerate. It bought Jason Wu, ALC and Mackage in quick succession. Then, in true private equity style, it sold Wu in 2019, and has folded the others into an undistinguished corner of its portfolio called “opportunistic”, which is code for “for sale”. After less than a decade, the luxury group’s ambitions have disappeared, not even bothering to maintain the Interluxe website.
The latest American efforts lean on the concepts that built Silicon Valley: scalable tech platforms that farm out the hard work and skill of luxury, which is manufacturing.
Authentic Brands recently launched Authentic Luxury Group, organising the intellectual property of labels including Vince, Judith Leiber Couture and Barneys New York — without producing products — while cementing a partnership with Saks Global, which now includes Neiman Marcus and Bergdorf Goodman. It bills itself as uniting “luxury and accessible luxury brands to redefine the modern luxury experience through innovative licensing, distribution and lifestyle offerings”.
Where are the key pillars of luxury goods — craft, history and romance? This is a collection of intellectual property; luxury brands as pure concepts without the bother of designers, factories and craftspeople. It sounds scalable and nimble in theory — stuff that American investors love.
P180 launched last spring to build another new US luxury group. It purchased stakes in Vince (carving out not the intellectual property, but the actual product part) and retailer Elyse Walker. It says it aims to collect luxury brands by establishing them on its business-to-business retail software, Caastle.
P180 promises to “optimise inventory monetisation”, the company says. “P180’s core mission is to invest in or acquire brands and retailers that stand to benefit from operational expertise and innovative technology.” Nary a word about passion or creativity. That’s not how Bernard Arnault describes LVMH.
Americans admire bootstrapping, sweat and hard-earned cash. We’re more patient with hard industry luxury businesses like Rivian electric vehicles (founded in 2009) and Sub-Zero appliances (based in Wisconsin and founded in 1945). But it appears that we’re no longer willing to nurture someone else’s fashion baby into adulthood, let alone old age.
We love a startup with a big dream. We will throw money at an emerging brand in its infancy, but private equity and venture capitalists, with their expectations of quick profits, lack long-term planning and discipline.
I recently posed a challenge on several social platforms: “Name an American luxury brand, dead or alive.” Only one response included a brand that has been absorbed into a successful luxury group — Tiffany, which has seen its fortunes soar under the LVMH umbrella.
Several people put forth Ralph Lauren and Coach. I’d argue those are more the likes of Levi s and Carhartt WIP — gloried accessible brands that became giants by building on a deeply American ethic of hard work and accomplishment rather than refinement and finesse. Coach’s legendary handbags were originally made of saddle leather and were known for their last-forever hardiness.
Shout-out to the person who replied: “In-N-Out Burger.” I feel you.
Comments, questions or feedback? Email us at feedback@voguebusiness.com.
More from this author:
New York’s ‘New Retail’? Printemps’s US arrival pulls out all the stops
