The luxury e-tailer saw modest growth as aspirational luxury consumers cut back on nonessential spending. In its first quarter of the year that ended in September, Mytheresa’s gross merchandise volume — a measure of goods sold on the platform — rose 3 percent year over year to €204 million ($224 million), against a 13 percent increase in the previous quarter.

The company’s profit margins also fell as price-conscious consumers flocked to competitors offering steeper discounts. Mytheresa’s gross profit margins slipped 7 percentage points in the first quarter, and its profits on the basis of adjusted earnings before interest, taxes, depreciation and amortisation dropped more than 100 percent.

Mytheresa said it expects sales and profits for the full fiscal year ending in June to come in at the lower end of its previous guidance, with 8 percent year-over-year sales growth and 3 percent EBITDA profit margins. Investors appeared spooked about Mytheresa’s growth prospects. The company’s stock dropped more than 5 percent following its earnings release.

Still, as aspirational consumers’ spending power remains challenged, Mytheresa made inroads with its focus on growing its cohort of high-spending clients. Its top customers grew 19 percent in the first quarter, and that segment accounted for nearly 40 percent of sales in the same period. That was due in part to the company partnering with brands like Erdem and Rabanne to offer exclusive in-person experiences for top clients. This concentration on high spenders helped Mytheresa’s average order value increase 5 percent to €660.

Learn more:

US Sales and Top Spending Customers Drive Sales at Mytheresa

The Munich-based e-tailer is benefitting from its focus on courting luxury’s wealthiest shoppers, CEO Michael Kliger told BoF.

Earlier this year Adrian Simonetti’s team was in Milan opening a swish new flagship store for La Martina, the polo-infused fashion brand he leads from Argentina. At the same time, the so-called ‘perpetual crisis’ that has plagued the chief executive’s home country for decades went into overdrive as annual inflation exceeded 100 percent. The contrast between the successful expansion of one Argentine company and the failure of the country’s economic policies couldn’t have been starker.

“The great recognition we’ve received in Europe [over the years] has boosted the business [overall and had] a positive impact in Argentina and [elsewhere] in Latin America. However, Argentina’s macroeconomic context presents major challenges like instability, changes in the country’s foreign trade policies, inflation and restrictive measures,” said Simonetti.

Shortly after his father Lando Simonetti founded La Martina in 1985, the family embarked on a mission to transform it into a global business. Today, the company has 700 distribution points across 25 countries including flagships in upmarket districts of Paris and Dubai as well as cities in Latin American countries like Mexico, Chile, Colombia, Brazil and Peru. It has also rolled out retail networks in key Asian markets like China and India.

Simonetti may be used to the orderly glamour of European fashion capitals, but he operates from a very different environment back in Argentina where his team of 100 employees run both the international and domestic business units. He can’t afford to be complacent about the latter since Argentina still accounts for a substantial 30 percent of company revenues through sales in 20 mono-brand stores across the country, from Buenos Aires in the east to Mendoza in the west.

The International Monetary Fund has provided more than 20 huge financial bailouts to the country over the years including an instalment of $6 billion last December. The cumulative effect of Argentina’s chronic instability has been soaring poverty and unemployment rates, a serious decline in living standards for the country’s lower- and middle-income consumers and a precarious operating environment for businesses across the board.

“Argentina’s growth performance over the past decade has been dismal,” said Martin Uribe, an Argentine professor of economics at Columbia University in the US, adding that the unfavourable economic environment goes back much further. “Noteworthy crises… since the 1980s involve the debt default of 1982, the hyperinflation of 1989-1991, the default crisis of 2001 and the balance-of-payments crisis of 2018. With no doubt whatsoever, all four crises have led to a large contraction in economic activity and high inflation.”

The key to survival through such turmoil, Simonetti suggests, is an agile management style. “We compete as an Argentine company, with limited resources and against the best brands in the world [so] we’ve acquired flexibility to move in different scenarios, thinking long-term as well as short-term,” he said.

“Nowadays we’ve reached a limit in the Argentina market. We’re benefitting from the growth of tourism coming to the country, but not so much from the local market,” Simonetti said, explaining that continuous international expansion has been key to growth.

Simonetti declined to disclose company earnings but said that EBITDA (earnings before interest, taxes, depreciation and amortisation) has been improving significantly in recent years, reaching 30 percent of turnover in 2022.

Yet company leaders like Simonetti now face a new wave of uncertainty. Argentina’s political transition is predicted to be turbulent next year as Javier Milei, a radical libertarian and self-described “anarcho-capitalist” who admires Donald Trump’s so-called “battle against socialism” was recently elected the country’s new president.

Some local business leaders were alarmed by both main candidates in the election, but others felt optimistic that Milei’s policies could tame hyperinflation. Argentine stocks and bonds did rise in trading outside the country immediately after his November win. However, supporters of his rival during the election fear Milei’s promises to make “drastic” changes to the economy could go too far or be counterproductive.

Only time will tell how the new government will impact the economy but businesses in Argentina are nothing if not resilient to change.

Operating in a Hostile Environment

Dusting off some memories from one of the most serious economic crises in Argentina’s history, Simonetti recalls how his father managed to battle for survival back in 2001 during the ‘corralito’ period.

“The corralito was dramatic. Supply chains halted, the banks closed, and people came into work with so much uncertainty. We reached a point where our cash [reserves] would last for just two more weeks,” said Adrian Simonetti.

“There were tears” from employees and suppliers when his father announced that they would have to wait to get paid until he found a way through the crisis, Simonetti recalled, but most of the company’s 50 staff members at the time kept working as the family steered La Martina through the chaos. Some of the youngest workers who remained are now company leaders, such as chief financial officer Juan Sebastian Labanca and Latin America regional chief executive Pablo Villalba.

“Whenever it comes to crises in Argentina, the human factor always sustains the business,” said Simonetti.

In recent years, companies operating in Argentina have been challenged not only by domestic instability but the local impact of international black swan events like the pandemic and global disruptions including the Ukraine war.

Domestically, however, “the first and most important [factor] is economic instability [due to] high inflation, currency devaluation and constant changes in government policies,” said Abelardo Marcondes, chief executive and founder of Mexico City-based LuxuryLab Global, a consultancy specialising in Latin American markets.

“The knock-on effect of such instability has been that local companies have “had to deal with infrastructure, logistics, sourcing of materials and transportation challenges [because Argentina] lacks modern frameworks. Costs have therefore increased for fashion companies,” Marcondes added.

On top of hyperinflation, labour costs are also relatively high due to government regulation, impediments to international trade and a shortage of credit.

“Argentina is suffocating because there is a lack of dollars. The country has a bad strategy for wanting to keep business ‘easy’ in a closed economy [meaning it’s] losing the opportunities of an open economy. Even so, a few fashion [and textile] companies manage to ride out [the turbulence],” said Ramiro Castiñeira, an Argentine economist and director of the economic and finance consultancy Econometrica.

According to Constanza Sierra, director of Buenos Aires-based Essentia Consulting, a firm serving premium and luxury brands, the challenges have led some Argentine companies to “move to other regions with clearer rules.”

Marcondes agrees: “Argentine fashion companies have mitigated the impact of economic instability mainly through diversification, exploring opportunities in international markets as well as expanding their customer base… [and pursuing] partnerships, collaborations...and digitalisation.”

Indeed, La Martina is not the only company to have found a way through Argentina’s many economic crises.

Spreading Risk Across the Region

Blue Star Group (BSG) has largely prospered since 1995 when it was launched by Carlos Castelli, an Argentine entrepreneur who eventually transformed the small family business into a network of 800 physical stores across Latin America.

The group, which owns high-street brands Todomoda and Isadora produced from factories in Buenos Aires and Chaco, has scaled thanks to well-timed overseas expansion plans. Such was the case when Argentina’s 2001 crisis reached its peak. Castelli spread the company’s risk to Mexico, where now more than a quarter of its stores are located, approximately the same number of stores as in Argentina, ranging from Jujuy in the far north to Chubut in the deep south.

“In 2011 we started operating in Chile and Peru. Then operations in Brazil happened in 2019 and Paraguay was our most recent launch in 2022,” said Martin Castelli, president of BSG, and son of Carlos, the founder. The company also sells on e-commerce giant Mercado Libre.

Though Castelli declined to disclose sales figures, he told BoF that the company has been “growing in an organic way with earnings and revenues increasing year on year, except for the pandemic [period].”

Another example of an Argentine label becoming a regional hit is Rapsodia, a company founded by Francisco de Narváez, Josefina Helguera and Sol Acuña in 1999. The contemporary fashion brand has grown from a small showroom in Las Cañitas to a footprint of 73 stores in five other Latin American countries: Mexico, Colombia, Chile, Uruguay and Paraguay.

“From day one we decided that the company had to be regional. The strategy had a lot to do with the fact that we couldn’t have 100 percent Argentinian risk. But through [our] retail, design, production and development arm, plus finances and processes from the back office, we were able to be sustainable during the crises,” says Juan Pazo, president of Rapsodia. “The strength of the company is its stability.”

In 2017, it secured investment from L Catterton, the private equity firm backed by LVMH and the Arnault Group.

Some of Argentina’s designer brands have also scaled up significantly despite the country’s seemingly endless economic and political instability. Jazmin Chebar, an eponymous womenswear brand famous for its printed textiles, expanded from a single Buenos Aires shop in 1997 to a company operating 31 stores across the region (11 of which are overseas in Uruguay, Chile, Paraguay, Peru and Mexico), employing 540 people.

Over the years, Argentina’s unpredictability may have slowed down some of the brand’s business plans, but it didn’t stifle growth completely. Though it declined to disclose earnings, Jazmin Chebar indicated that the number of garments produced annually went from 6,000 units in 2001 to 600,000 units in 2022. “The target is to reach a million garments in the next five years [albeit] in an uncertain world,” said company president Claudio Drescher.

While many fashion businesses in Argentina have failed over the years, or struggled to the point of being on the brink of bankruptcy, a small group of companies including La Martina, Blue Star Group, Rapsodia and Jazmin Chebar have found a way to do more than just survive the country’s ‘perpetual crisis.’

Their successes are not just a factor of market-ready designs and careful overseas expansion plans. According to Sierra, the firms also tend to offer clever branding strategies and customer service innovations.

Most of all, “Argentine companies have a characteristic that we should not be proud of [if it is the only feature of their success], but it is an [important] characteristic [nonetheless]. And that is adaptability,” said Jonatan Loidi, chief executive and founder of Buenos Aires-based consultancy GrupoSet.

Being forced by the country’s turbulent market to become adaptable at a high-level has made some companies very good at being “adaptable to [specific] changes [like] consumption [patterns], trends and [fluctuating] resources,” Loidi added.

“[It’s not just about] adapting to survive [here] but being able to create incredible things at the same time that end up being used by the whole Latin American region. I believe this is a distinguished feature of the Argentinian fashion market.”

🇯🇵 Tokyo’s Azabudai Hills could become a new luxury shopping hub. Japanese property developer, the Mori Building Company, has opened an enormous mixed use complex featuring offices, residences, retail space, hotels, cultural facilities and universities in the city’s Minato ward, centred around three newly built skyscrapers, one of which now ranks as Japan’s tallest building. Situated between Mori Building’s sister projects, Roppongi Hills and Toranomon Hills, the complex will house dozens of global luxury brands in spring 2024, according to a list of stores on the district’s website. [Japan Times]

🇨🇳 Chow Tai Fook revenues are up in the Hong Kong and Macau markets. The Hong Kong-based jewellery giant has reported a 6.4 percent year over year increase of overall revenue in the H1 FY24 period reaching HK$49.5 billion (US$6.3 billion). Mainland China market revenues fell 0.6 per cent to HK$40.7 billion but revenue in Hong Kong, Macau and other markets was up 57.7 per cent to HK$8.8 billion on the back of the partial return of mainland Chinese tourists to the special administrative regions. [Inside Retail Asia]

🇧🇷 Brazilian fashion retail giant Lojas Renner sees profits fall 32.9% in Q3. The Porto Alegre-based group operating a chain of 600 stores selling affordable fashion brands Renner, Youcom and Repassa across Brazil, Argentina and Uruguay has recorded net profit of 172.9 million reais ($35.2 million) in the period. In a statement, the company cited “a still challenging consumption scenario, especially in August…However in September sales improved, a trend that continued in October.” [Fashion Network Brazil, Bloomberg]

🇬🇭 Ghana hosts Middle East & Africa Duty Free Association conference. Investor Roberta Annan, founder of African Fashion Foundation and Annan Capital Partners, opened the conference hosted by Avolta, the parent company of travel retailer Dufry. The event, which saw duty-free and other retailers selling fashion, beauty and other products gather in the Ghanaian capital Accra, was the first edition held in West Africa. [Global Retail Travel Magazine]

🇨🇳 Harvey Nichols will vacate Hong Kong’s Landmark mall in March. The London-based luxury department store owned by Hong Kong-based Dickson Concepts will give up its lease on the 60,000 sq ft space amid weaker spending in Hong Kong by locals and Chinese tourists. [South China Morning Post]

🇦🇺 Profits down at Australian billionaire Naomi Milgrom’s fashion group. ARJ Group, the private vehicle that holds women’s fashion brands Sportsgirl, Sussan and Suzanne Grae, has posted a fall in annual profit, from AUS$34.8 million (US$22.9) to AUS $13.7 million (US$9 million) in the 12 months to July last year, according to accounts lodged with the Australian Securities and Investments Commission. [Australian Financial Review]

🇳🇵 Social media influencers in Nepal are angry about an abrupt TikTok ban. Citing loss of income and freedom of speech, people held protests in the capital Kathmandu with content creators demanding the government revoke its recent ban on the app. Nepal’s neighbour India banned it and other Chinese apps in 2020 over concerns about data usage and TikTok owner Bytedance’s proximity to the Chinese government, whereas the Nepal government’s stated rationale is that the app disturbs “social harmony and goodwill.” [Reuters]

🇨🇳 Alibaba reassures staff over layoff rumours and Jack Ma share sale. Jiang Fang, chief talent officer at the Chinese e-commerce major, said rumours that it plans to lay off 25,000 people were untrue and that the timing of news that company founder Jack Ma is selling some shares was coincidental to an announcement that the firm is scrapping its plans to list its cloud unit. [Reuters]

🇦🇺 Australian luxury brand Oroton doubles FY23 operating profit. The 85-year-old leather goods and accessories retailer acquired by billionaire Will Vicars in 2017 has recorded annual operating profit of AUS$7.4 million (US$4.8) in 2023. During the period, the brand opened two new stores in Sydney and one in Perth, with CEO Jennifer Child stating, “we continued to refine our retail footprint with a ‘right store, optimal catchment’ approach.” [Ragtrader]

🇨🇳 Chinese social media’s end of anonymity impacts fashion influencers. A new government rule requiring users with large followings to show their real names has drawn criticism from influencers who say it eliminates their privacy and exposes them to harassment. WeChat, Douyin, Xiaohongshu and Bilibili published separate statements with Weibo saying it will first apply to users with over 1 million followers, then to those with over 500,000. Some fashion and beauty content creators who go by aliases have reduced their follower counts or left platforms. [Rest of World]

🇮🇷 Iran signs MOU with China to expand textile industry trade. The chairman of the board of directors of the Iran Textile Industries Association and the head of China International Textile Trade Promotion Council in Shanghai have signed a memorandum of understanding on the sidelines of ITMA Asia, a biannual textile and garment technology exhibition. The two sides stated ambitions to expand investment and share technical know-how. [Kohan Textile Journal]

🇨🇳 BASF defends its textile joint ventures in China’s Xinjiang province. The German multi-national chemical producer, whose innovations include materials for stretch textiles used in sportswear, is facing scrutiny over alleged links to companies in the province. Inputs from Xinjiang are mostly barred from entering the United States because of concern for Uyghurs and other minorities who have faced forced labour in global supply chains for industries such as cotton. BASF said, “none of [our recent audit] reviews have found any evidence of forced labour or other human rights violations.” [Sourcing Journal]

🇹🇩 Better Cotton looks to expand in Africa by launching programme in Chad. The London-based non-profit is reportedly in discussions with Cotontchad, the country’s only known aggregator and exporter of cotton. Its initiatives typically aim to improve farmers’ profitability, increase the sustainable cotton yield and monitor climate resilience improvement activities. Better Cotton is already grown in 22 countries, including four other African nations, and it has recently launched a programme in Côte d’Ivoire. [Ecotextile News]

🇨🇳 Hong Kong to host US streetwear festival Complexcon next year. The event popular with sneakerheads and youth culture aficionados since it was founded in Los Angeles in 2016 has partnered with AsiaWorld-Expo. It expects to attract 30,000 guests from across the Asia region when it bows in March 2024. Complex, the US magazine affiliated with the event, entered China in 2021 with a local language edition. [South China Morning Post]

🇮🇳 Indian footwear retailer Khadim to raise funds of 15 crore rupees. Through a preferential issue of fully convertible equity share warrants, the company plans to use the funds worth around $1.8 million for a nationwide retail expansion plan. “[It] enables the stakeholders to participate in the growth trajectory of Khadim,” said Indrajit Chaudhuri, CFO of the company which sells brands including its namesake Khadim, British Walkers, Lazard, Turk, Pro, Sharon, Cleo and Waves across more than 840 retail outlets. [Economic Times]

🇦🇪 Van Cleef & Arpels opens L’École School of Jewelry Arts in Dubai. The French jeweller has opened a permanent campus in the Dubai Design District (D3), making the Middle East branch the fourth international location after Paris, Hong Kong and Shanghai. It will offer a programme of courses on gemstones and jewellery know-how and history, talks, exhibitions, publications and research projects. [Gulf Today]

🇯🇵 Puma appoints Ryokusai Inoue as general manager of its Japan business. The German sportswear giant has tapped Inoue, an executive who had a stint at Tesla, to succeed Kohei Hagio, Puma Japan’s head since 2021. Inoue will report directly to the Puma CEO Arne Freundt. [Inside Retail Asia]

🇨🇳 Valentino taps Chinese actress Yang Zi as brand ambassador. Yang, also known as Andy Yang, is famous for her roles in television dramas. The Italian luxury brand has featured her in a campaign for its Spring 2024 collection. [Jing Daily]

🇰🇷 Dolce & Gabbana taps Korean actress Mun Kayoung as brand ambassador. The German-born, South Korean-raised actress, also known as Moon Ga-young, is famous for her roles in popular television series. [BoF Inbox]

Vanessa Kingori, Condé Nast Britain’s chief business officer and Vogue European business advisor, is exiting the company to join Google, according to sources and internal communications seen by BoF.

In recent years, Kingori has been vital to helping Condé Nast navigate an increasingly challenging environment for legacy media players, spearheading innovative ways to open and expand new revenue streams like digital content creation for brand clients.

She will be joining Google UK as managing director of technology, with a focus on deploying new tools including artificial intelligence. In recent months, the search giant, like many other big tech players, has begun introducing features powered by generative AI. Shopping has been a key area of experimentation for the company.

Google’s new AI-powered virtual try-on tool lets users see what a clothing item looks like on a wide range of computer-generated models, and for the holidays the tech giant is testing an AI-powered feature that offers intelligent gift recommendations.

Kingori joined Condé Nast in 2009, becoming publishing director of GQ magazine in 2015 before moving to the same role at British Vogue in 2018, months after newly appointed editor-in-chief Edward Enninful set about rebooting the title.

Under Kingori’s watch, British Vogue experienced “unprecedented revenue growth” and became “extremely profitable,” Condé Nast told BoF in 2021.

Kingori’s success at British Vogue led to her 2021 appointment as Condé Nast Britain’s chief business officer, a newly created role intended to replicate British Vogue’s momentum across Condé Nast’s UK portfolio. She swiftly restructured Condé Nast Britain’s business, resulting in a 27 percent rise in revenue in the first half of 2022, the last period for which figures were available.

Kingori’s departure comes after years of restructuring at Condé Nast.

Next year, Edward Enninful will step down from his roles as European editorial director of Vogue and editor-in-chief of British Vogue, transitioning to a global advisory role at Condé Nast. Trusted American Vogue veteran Chioma Nnadi is taking the reins from Enninful as British Vogue’s head of editorial content.