In the 2010s, investors poured hundreds of millions of dollars into start-ups that promised to reinvent how people shop for clothing. Stitch Fix and Rent the Runway were at the vanguard of one strain of this movement, popularising the idea that a subscription model could work in fashion. Though they had distinct approaches – boxes of clothes handpicked by stylists for Stitch Fix, rented luxury fashion for Rent the Runway – both held out the promise of infinite choices, delivered to customers’ doorsteps.

You know what happened next. There were unicorn valuations and initial public offerings, crashes and pivots. With both companies reporting earnings this week, it’s worth revisiting why they struggled and what the future may hold.

Stitch Fix and Rent the Runway are dealing with different versions of the same two problems:

• The “endless closet” circa 2018 was a good deal for consumers, but expensive and difficult to execute.
• Demand isn’t anywhere near high enough to justify those costs, or to meet investors’ expectations.

Both companies are making progress on problem No. 1: Stitch Fix has cut costs, laying off workers and dialling back some of its ambitions, including winding down its UK business. Rent the Runway closed its stores in 2020, cut staff and reduced shipping costs. Losses have narrowed at both companies, though neither is profitable. They must strike a delicate balance though. Customers who try rental, subscription boxes and other new-model retail have always complained about turnaround time and low inventory of desirable brands and styles. They won’t put up with further cuts to service.

Demand is a thornier problem. Both companies seem to have accepted that they won’t reshape global retail in their own image anytime soon. Rent the Runway is still growing – revenue in 2022 totalled $296.4 million, up 43 percent from the previous year and surpassing pre-pandemic levels. But an unexpected dip in second-quarter sales showed that further gains will be hard won. Competition is also fierce, with Urban Outfitters’ Nuuly, a competing rental service, as well as peer-to-peer rivals rapidly gaining ground. At Stitch Fix, the question is whether there’s a sizable market for subscription boxes at all; revenue fell 22 percent in its fiscal year ending in July, to $375.8 million.

The endless closet appears likely to remain a niche. Stitch Fix and Rent the Runway are hoping it’s at least a lucrative one.

What Else to Watch for This Week

Monday

The Fashion Awards are held in London. Sarah Burton, Daniel Lee, Jonathan Anderson, Matthieu Blazy and design duo Miuccia Prada and Raf Simons are up for designer of the year.

Tuesday

Signet Jewelers, Stitch Fix, Rent the Runway release quarterly results

Thursday

Chanel shows its Métiers d’art collection in Manchester

Lululemon reports results

The Week Ahead wants to hear from you! Send tips, suggestions, complaints and compliments to brian.baskin@businessoffashion.com.

November and December are always a battle of wills between consumers and retailers. Shoppers have been trained by decades of Black Friday door busters to be on the lookout for deeper and deeper markdowns as they hunt for gifts. Retailers’ objective every year is to hold the line on pricing, or at least avoid retreating too far past 30 percent off. Few succeed.

This year has the potential to be a true rout. Retail giants from LVMH to Walmart are warning about a spending slowdown. The National Retail Federation predicts overall holiday sales will rise between 3 and 4 percent, a middling pace that would definitively close the book on the post-pandemic “revenge shopping” boom (even in 2022, holiday sales rose 5.4 percent; in the pre-Covid era you have to go back to 2005 to find growth higher than that). Other forecasts are more optimistic.

So far, retailers have been relatively restrained with discounts. WalletHub canvassed 13 big retailers, and found 15.7 percent of apparel items on sale, compared with 21.1 percent last year. The average discount for all items was 35 percent, versus 37.2 percent in 2022.

That discipline is unlikely to hold. If the post-Thanksgiving crowd doesn’t show up at the mall on Friday, or fill their online carts next week, retailers will almost certainly hit the markdown panic button. Many are already sitting on higher inventories than they’d like, a holdover from the supply chain turmoil of 2021 and 2022. They need a good holiday season to clear that remaining overhang out.

Inflation, as always, is the X factor. On the one hand, prices are growing at their slowest pace since early 2021, easing pressure on consumers’ budgets and potentially putting some in the mood to spend. But many are also expecting (futilely, in most cases) that prices will now begin to fall back. Headlines about the falling cost of a typical Thanksgiving dinner only add to that belief.

Those shoppers will hold out for deeper discounts in December. Retailers may have little choice but to comply.

The Week Ahead wants to hear from you! Send tips, suggestions, complaints and compliments to brian.baskin@businessoffashion.com.

Diwali, the five-day festival of lights that begins Sunday, is India’s biggest holiday, but local retailers haven’t leveraged the religious and cultural event to the extent that Christmas has been commercialised in the West. And it doesn’t yet stack up to the big shopping frenzies in China and the US. Last year, an Indian retail trade group estimated spending across all categories around the holiday totalled $15 billion, which sounds like a lot until you consider that Alibaba alone recorded $85 billion in Singles Day sales via its platforms in 2021.

That’s not the whole story though. Singles Day sales have almost certainly peaked (Alibaba doesn’t release raw numbers anymore, rarely a good sign), and retailers’ revenue from Black Friday, Prime Day and other events typically grows by single digit percentages, if at all. Diwali’s all upside: during the lead-up to the festival, a period that typically lasts from September through early November, Indian shoppers spent $27 billion, up 25 percent from a year ago and more than double the pre-pandemic figure.

That growth is, if anything, going to accelerate: India, this year, surpassed China as the world’s most populous country, and its economy, while smaller, is growing faster. Diwali, observed by Hindus and other religious communities, is also a global phenomenon, celebrated by big Indian diasporas in the US, the UK and other nations.

What do people celebrating Diwali like to buy? Traditionally, gold jewellery is a big seller, though near-record prices for the metal may hold back demand (that hasn’t stopped big Indian retailers, including Kalyan Jewellers and Tanishq, from aggressively opening new stores ahead of the holiday). High inflation may keep some lower and middle-income consumers on the sidelines this year, with the bulk of growth expected to come from luxury brands. Jimmy Choo, for example, launched a Diwali capsule fronted by the Bollywood actor Ananya Panday. Jio World Plaza, the long-in-the-works luxury megamall in Mumbai, opened in the nick of time. Shopping is increasingly migrating online, however: Amazon and Flipkart both reported spikes in fashion sales during shopping events in October, a good sign for how they’ll fare during Diwali.

Arnika Thakur contributed to this article

What Else to Watch for This Week

Sunday

Diwali begins.

Monday

Tuesday

On reports earnings.

US October inflation data, UK September unemployment rate released.

Wednesday

Future Fabrics Expo, featuring sustainable textiles, begins in New York.

TJX, Target report results.

UK October inflation data released.

Thursday

AI Fashion Week begins in Milan. Winning designs from last year’s contest recently went on sale at Revolve.

Ross, Macy’s, Burberry report results.

Friday

Inaugural F1 race in Las Vegas. Brands are treating the event as a potential watershed moment for the sport’s popularity in the US.

UK October retail sales, Eurozone October inflation data released.

Saturday

“Helmut Newton - Fact & Fiction” opens in A Coruña, Spain.

The Week Ahead wants to hear from you! Send tips, suggestions, complaints and compliments to brian.baskin@businessoffashion.com.

Peak Singles Day?

Alibaba’s shopping holiday, which kicked off in late October and builds to an all-out frenzy on Nov. 11, combines the everyday deals appeal of Amazon Prime Day with the “these brands never go on sale” cachet of the Nordstrom Anniversary Sale. Or it used to, anyway. Singles Day has lost a bit of its oomph in recent years. After hitting a record $84.5 billion in gross merchandise value on its platforms in 2021, Alibaba didn’t release sales data last year.

That slump was partly due to toned-down promotions amid government pressure to avoid conspicuous consumption, a campaign that has eased off this year. A bigger threat is the migration of young customers to Douyin. The short video platform has built a livestream shopping empire that is changing the way its users shop in ways that owner ByteDance could only dream for TikTok. Alibaba offers plenty of live shopping as well, and is playing hardball with brands, threatening to yank them from its marketplace should it be discovered they’re offering better deals elsewhere, according to Reuters.

High-pressure tactics might help, but ultimately the success of Singles Day comes down to the strength of China’s economy, which remains in post-Covid limbo. Pinduoduo said sales are up, but customers are buying more “practical” items in step with uncertain times.

For Western brands, Singles Day remains one of the biggest opportunities to sell to Chinese consumers. But even there, the outlook is hazy: early reports indicate Chinese brands are climbing the ranks of top Singles Day sellers, with Proya beating out L’Oréal and Lancôme in the opening hours of Tmall’s presale, for instance.

Richemont-Farfetch: What Are They Waiting For?

When UK regulators finally approved Microsoft’s acquisition of the gaming studio Activision last month, the two companies moved within hours to finalise the deal. We’re coming up on two weeks since EU regulators gave the green light for Richemont to sell a 47.5 percent stake in Yoox Net-a-Porter to Farfetch, and it’s been radio silence.

Though much smaller than Microsoft-Activision in dollar terms, Richemont-Farfetch is far more complex. YNAP will be run jointly for several years, and Richemont is partnering with Farfetch in other ways as part of the transaction. Farfetch’s fortunes have changed dramatically for the worse since the deal was announced, potentially requiring some adjustments to how things play out.

An update could come at any time. But Richemont executives will presumably speak to the matter when the company releases its quarterly results on Friday. One subject to address is the size of the writedown Richemont expects to take on its e-commerce adventure. Richemont agreed to accept a stake in Farfetch in exchange for a big chunk of YNAP; once worth $440 million, it’s now set to receive shares worth less than $100 million. A more long-term question is how Richemont can get rid of the rest of YNAP: the original plan was for Farfetch to buy out its new partners in a few years after turning Net-a-Porter profitable. But if Farfetch’s problems worsen, will Richemont have to put in yet more money to save the deal?

The whole point of this deal is to remove YNAP from Richemont’s balance sheet. But as Bernstein analysts put it recently, “it will remain a drag on Richemont’s share price until they alleviate investor concerns on how far they are willing to go to help their new partner.”

What Else to Watch for This Week

Monday

CFDA Awards in New York

Tuesday

Watches of Switzerland reports results

Wednesday

Tod’s, Adidas, Pandora, Under Armour, Ralph Lauren report results

Thursday

Capri, Coupang, Tapestry, Hanesbrands report results

Friday

Richemont earnings

Saturday

Singles Day (China)

The Week Ahead wants to hear from you! Send tips, suggestions, complaints and compliments to brian.baskin@businessoffashion.com.

The point of a fashion conglomerate is scale and diversification: resources can be shared across the portfolio, keeping costs down. And if one brand has hit a rough patch, others can pick up the slack.

VF Corp. is getting neither of those benefits right now. Three of its four biggest brands – Vans, Timberland and Dickies – are losing customers, and booming sales at The North Face aren’t enough to make up for it. Behind the scenes, high debt levels are reducing the benefits of its size, as is a wide-ranging portfolio that includes Jansport backpacks, Dickies overalls and Supreme T-shirts.

A pair of activist investors have recently offered up some solutions: sell the non-core brands, cut costs and use the cash those moves free up to pay down debt and resuscitate Vans. Though not mentioned by either fund, Supreme’s struggles since VF’s $2 billion acquisition in 2020 are also weighing on the company’s outlook.

Their proposals probably aren’t too far off from what VF CEO Bracken Darrell is pushing internally. VF had already said it was shopping around its backpack brands before the activists had their say, for instance.

These moves are in keeping with the industry trend toward bigger, narrowly focused conglomerates: Kering sold the last of its non-luxury brands years ago, and there is constant speculation as to why hard luxury-focused Richemont holds onto ready-to-wear brands like Chloé. Tapestry’s pending acquisition of Capri is another example. It’s a bit harder to draw a through line between Vans, The North Face and Supreme than Coach and Michael Kors. But it’ll be easier once VF addresses the problems weighing on its balance sheet.

In a statement, VF said it is “taking immediate and decisive actions to strengthen the company’s position.” This week’s earnings will provide the first public opportunity for executives to lay out their own vision in more detail. Then it’s up to shareholders to decide which path they prefer.

What Else to Watch for This Week

Monday

Phoebe Philo releases her debut collection under her own brand

VF Corp. reports results

Tuesday

Halloween

Prada reports results

Eurozone reports third-quarter GDP

Wednesday

Estée Lauder Companies, Revolve, E.l.f., Next report results

US Federal Reserve interest rate decision (no change expected)

Thursday

Hugo Boss, Kontoor, Figs, Shopify report results

Bank of England interest rate decision (no change expected)

Friday

Eurozone September unemployment report

US October unemployment report

The Week Ahead wants to hear from you! Send tips, suggestions, complaints and compliments to brian.baskin@businessoffashion.com.

Usually, the controversies around retailers’ Pride Month collections involve whether the endless parade of rainbow-themed clothing and marketing are too patronising, or just tacky. This year, the conversation has taken a darker turn.

Last week, Target said it would pull some items and move Pride displays away from the front of stores in certain markets. The retailer said it did so after employees were threatened and displays knocked over by customers incensed over trans-inclusive merchandise, including a “tuck-friendly swimsuit” conservative media falsely reported came in children’s sizes.

The incident is part of a wider backlash against brands that have embraced pro-LGBTQ messaging in their marketing and merchandise. In April, Bud Light sales dropped after the brand worked with trans influencer Dylan Mulvaney. Several states have passed or are considering laws restricting drag performances and medical care for trans individuals. Internationally, progress on LGBTQ rights has seen reversals in China and other countries.

The rewards for engaging with LGBTQ customers still outweigh the risks for most brands in the US and Europe. Rainbow-themed underwear and donations to mainstream nonprofits rarely raise eyebrows even among conservative activists these days (whether they’re actually helping LGBTQ communities or just pandering to sell merch is a separate question). Many brands welcome the free press that comes with getting called out for supporting a progressive cause; last week, Swatch Group CEO Nick Hayek mocked raids on its stores in Malaysia that saw authorities seize rainbow-coloured watches. Others simply ignore the firestorm; Maybelline was also targeted by boycott calls after working with Mulvaney in April, but it and parent L’Oréal seem to have emerged none the worse for wear.

For the most part, marketing ahead of Pride Month, which starts June 1, is proceeding as usual this year. US and UK brands have introduced 27 percent fewer themed items this year compared with the same period in 2022, according to Edited. But that’s because more brands, including Bombas and Abercrombie & Fitch, are adopting a “Pride Year-Round” approach, the analytics firm said.

The decisions to yield by Target and Bud Light indicate a new strategic calculation, however. The intensity of the anti-trans response clearly caught these companies off guard. Target’s safety concerns aren’t just spin: retail workers didn’t volunteer to be on the front lines of the culture war, though training and protections for employees who deal with unruly customers can help. Target has also been down this road before, having been boycotted in 2016 for speaking out against North Carolina legislation that required trans people to use the bathroom corresponding to the gender they were assigned at birth.

Still, caving to anti-trans activists is unlikely to prove the right move, on moral or commercial grounds. Brands increasingly find success appealing to niche groups of customers rather than chasing a mass market that may not exist anymore. Target knows this; it released over 2,000 Pride-themed items this year. There are always some eye rolls, but going all-in on Pride has built goodwill among LGBTQ customers and, conservative activists aside, consumers generally. Some of that connection was eroded by last week. By trying to please both sides, Target and other retailers will end up pleasing neither.

What Else to Watch for This Week

Monday

Memorial Day (US)

Tuesday

The Business of Beauty Global Forum begins at Stanly Ranch in Napa Valley, California. Join us from anywhere in the world by registering for the global livestream.

Wednesday

Day Two of the The Business of Beauty Global Forum

Capri, Nordstrom report earnings

Thursday

Pride Month begins

US Treasury deadline to raise the debt limit

PVH, Victoria’s Secret, Lululemon, Macy’s, Dr Martens report earnings

Eurozone reports May inflation data

Friday

US reports May unemployment data

The Week Ahead wants to hear from you! Send tips, suggestions, complaints and compliments to brian.baskin@businessoffashion.com.

For many direct-to-consumer brands, e-commerce marketplaces and resale platforms, the path to profitability is less of a marathon and more of an Indiana Jones-style sprint to stay ahead of the giant boulder threatening to crush any stragglers. Most of the fashion and beauty start-ups that went public in the last few years are struggling to convince investors they have what it takes to weather the current period of sluggish growth and elusive profitability. Patience is wearing thin for some of the worst-off names, and a few, like Poshmark, have already been acquired at a discount.

The gloomy atmosphere is reflected in share prices: Allbirds and The RealReal are down over 90 percent from their IPOs. Both trade perilously close to $1 a share, the threshold where they risk being delisted by the Nasdaq exchange. Allbirds has to prove it can revive interest in its sneakers through new wholesale partnerships, while The RealReal needs its revamped consignment programme and other changes to achieve profitability by its 2024 target. High interest rates ensure few of these firms will be able to count on an outside infusion of cash when their money runs out.

Other companies reporting next week are in a less dire position, though they will need to show that recent progress can be sustained. Warby Parker is predicting revenue will rise by 8 to 10 percent this year as it opens more stores, and that EBITDA margins will markedly improve. Thredup is projecting it will break even on an adjusted EBITDA basis by the end of 2023, as it works through excess inventory and ramps up its business providing resale to third-party retailers. Results this week will help determine whether investors believe these forecasts.

The latest round of numbers will also help shape thinking around fashion’s start-up scene, particularly the more recent wave of Gen-Z targeting brands that hope to avoid their predecessors’ mistakes. Currently, the mood is grim across the board. But we may begin to see more of a winners-and-losers narrative emerge.

What Else to Watch for This Week

Sunday

MTV Movie & TV Awards

Monday

London Craft Week begins

Tuesday

Among the companies reporting earnings: Coupang, Under Armour, Coty, Olaplex, Warby Parker, Affirm, Allbirds, Thredup and The RealReal

Wednesday

Tod’s, Asos and Mytheresa report results

US April inflation data released

Thursday

JD.com, Tapestry, Prada report results

Bank of England interest rate decision

Friday

Richemont, Shiseido report results

UK Q1 GDP data

Prada Mode in Tokyo

The Week Ahead wants to hear from you! Send tips, suggestions, complaints and compliments to brian.baskin@businessoffashion.com.

Remembering Rana Plaza

Ten years ago this Monday, the Rana Plaza building in Dhaka, Bangladesh collapsed, killing over 1,100 people, mostly garment workers. They made clothing for brands that are household names around the globe. In the wake of the disaster, hundreds of brands signed a binding agreement with trade unions to monitor and address safety violations; a smaller group of largely US brands formed a separate, voluntary initiative. The programmes helped substantially improve safety standards in the factories they covered. But advocates for workers say the industry is still rife with other abuses, including low wages and other forms of exploitation. In those areas, there’s been evidence of backsliding, especially since the pandemic. Thousands of factories in Bangladesh weren’t covered by either safety programme, and there’s little change in other manufacturing countries. In addressing one specific humanitarian crisis, the fashion industry has allowed others to fester.

Kering’s Long Slog

The luxury giant is almost certain to see an improvement from its bleak fourth quarter, when Balenciaga was at the nadir of its troubles and Gucci sales sputtered. But the recovery story is still in its early days, and the company’s latest results may not offer much in the way of green shoots. New Gucci designer Sabato De Sarno won’t present his first collection until Milan Fashion Week in September, and while Balenciaga’s toned-down March show may have marked a turning point, its scandals almost certainly weighed on sales earlier this year.

The real question is whether these problems will make it harder for the company’s brands to participate in China’s economic recovery. Kering shares rose along with other luxury shares earlier this month when LVMH reported a faster-than-expected rebound in China. Will it be enough to make up for a slowdown in the US, though? Kering is not the only luxury giant to target America for growth in the last couple of years, but it is a bit more dependent on consumers there. North America made up 27 percent of 2022 revenue, compared with 21 percent for LVMH’s fashion and leather group and 18 percent for both North and South America combined at Hermes.

A Grand Reopening

After four years and two owners, Tiffany’s 5th Avenue flagship will open its doors to the public again on Friday. The epic renovation, begun in 2019 before LVMH acquired the jewellery brand for $15.8 billion in January 2021, is reportedly the most-expensive such project for a luxury store ever. Tiffany’s flagship has an unusual place in the retail landscape, performing double duty as a top New York tourist attraction while at one point driving 10 percent of sales for the brand. LVMH wants to bring back the crowds, and then some, but also more ultra-wealthy shoppers who might drop $1 million-plus on custom pieces in the new private client suite on the 10th floor.

The refreshed store has plenty to offer both the tourists and the big spenders, with design touches throughout that speak to both the old Tiffany and the new: plenty of nods to Audrey Hepburn, Elsa Peretti and Jean Schlumberger’s Bird on a Rock, but it’s the Basquiat featured in last year’s Beyonce campaign that greets visitors when they pass through the revolving doors.

What Else to Watch for This Week

Monday

10th anniversary of the Rana Plaza building collapse

Tuesday

Kering reports first-quarter results

Wednesday

Steven Madden reports results

Thursday

Amazon reports results

US first-quarter GDP reading

Friday

Tiffany’s 5th Avenue flagship reopens

Saturday

Louis Vuitton shows pre-fall collection in Seoul

The Week Ahead wants to hear from you! Send tips, suggestions, complaints and compliments to brian.baskin@businessoffashion.com.