This week, shares of Warby Parker started trading in what was arguably the most anticipated of this year’s wave of fashion IPOs.
The American eyewear brand went public via direct listing, so it did not sell any new shares. The stock was up 36% from its benchmark price of $ 40 per share on its first day of trading on the NYSE on Wednesday. Warby Parker’s market cap is now over $ 6 billion, double the valuation of $ 3 billion it was given after raising $ 245 million in August 2020.
Just as there isn’t a single reason consumers choose one brand over another, there is no clear answer as to why investors rushed to buy Warby Parker stock. as well as a handful of similar recent IPOs, such as On Running and Olaplex, while steering away from the rest. But a unifying factor is a strong brand identity.
When a company’s shares rise, it reflects the underlying assumption of investors that the best is yet to come. For a hot brand like Olaplex, it’s an easy story to tell: The California-based beauty brand, known for its luxury hair care products, has built a strong following through its direct-to-consumer business. consumers, in addition to its wholesale partnerships with Sephora and Beauty. distributors who sell their products at trade fairs. After going public on Thursday, he now has plenty of money to spend on expanding into wellness and other categories. Managing Director JuE Wong told BoF that Olaplex’s sustainable packaging initiative has likely helped its IPO stand out from other newbies in the market.
Investors believe that Warby Parker has also developed a strong identity, especially in business circles. After all, many companies have positively called themselves the “Warby Parker” of their industries. While the track records of the many fashion start-ups that have emulated Warby’s approach are decidedly mixed, the disruptive brand defying slow incumbents remains a compelling narrative.
By comparison, Aka Brands, the parent company of fast fashion brand Princess Polly, had to cut the size and price of its IPO last week, and the shares fell as soon as they started trading in stock Exchange. Aka Brands is profitable, but has struggled to convince investors that its rapid growth is sustainable. Fast fashion brands online can skyrocket and disappear just as quickly when a faster, cheaper rival arrives. The company will therefore have to work hard to retain its Gen-Z customers.
In a statement to BoF, an Aka Brands spokesperson said he was “confident in our growth strategies over the quarters and years to come and in our ability to redefine retail for the next generation. “.
Some investors approach Warby Parker with the same caution. Despite all her disruptive vision, she also intends to grow by opening hundreds of stores. This puts the brand in more direct competition with the leader in its category, EssilorLuxottica. The conglomerate owns Lenscrafters and Sunglass Hut; each of which holds 13% of the US eyewear market, according to Earnest Research. Warby’s share is 7%, up from 4% in 2017.
Recruiting the incumbent will be costly and Warby Parker is already facing losses. Net income increased from $ 272.9 million in 2018 to $ 370.5 million in 2019, while losses intensified from $ 22.9 million to $ 55.9 million (although ‘he lost just $ 7.3 million in the first six months of 2021). (Warby Parker is in a quiet period and declined to comment.)
The Warby Parker share price has remained close to its post-IPO level. Its performance in the weeks and months to come will offer a better idea of how the market perceives the brand. When that verdict comes, Warby Parker’s list will serve as a more definitive decision on the larger DTC space and whether investors will adhere to DTC’s affinity to prioritize growth over long-term profit.
Editor’s Note: This article was revised on October 1, 2021 with updated figures regarding the losses of Warby Parker.
NEWS IN BRIEF
FASHION, BUSINESS AND ECONOMY
Gucci, Louis Vuitton, Valentino, Hermès among the 44 brands to be shown in homage to Alber Elbaz. Each of the attendees – a mix of established luxury houses and smaller brands like Thebe Magugu and Wales Bonner – will create a bespoke look “inspired by their heritage or a special interpretation of an iconic silhouette,” according to a statement from Thebe Magugu and Wales Bonner. Elbaz label, AZ Factory. The tribute will be presented at an event broadcast live on October 5.
Luisa Via Roma announces an investment of 152 million dollars with an IPO plan. The Italian e-commerce retailer has announced an agreement with private equity fund Style Capital, which owns a majority stake in Australian brand Zimmermann and a minority stake in Italian brand MSGM. Current President and CEO Andrea Panconesi will retain 60 percent of the company.
Canada Goose is developing in footwear. The November release of the $ 1,300 winter boot will expand the luxury outerwear brand into a new category at a crucial time for its business. The brand expects to surpass $ 1 billion in revenue for the first time this year, after seeing its online and China sales increase during the pandemic.
OTB President Renzo Rosso expects organic sales growth of 20% in the coming years. Rosso said he had “very ambitious goals” set for the next few years, including targeting new acquisitions and a public listing, as the industry recovers from the Covid-19 pandemic. OTB owns brands such as Diesel and Maison Margiela and acquired Jil Sander in March.
Parade raises $ 20 million in a new round, bringing the valuation to $ 140 million. The direct-to-consumer intimate brand intends to use Series B funds, led by investment firm Stripes, to expand its product offering, open pop-up stores and make new commitments in the field. sustainable development.
Boohoo and H&M warn that supply chain issues are hitting European retail. Boohoo Group Plc lowered its forecast for sales and profitability as revenue growth for Hennes & Mauritz AB slowed as high shipping costs and disruption of the global supply chain continued to challenge apparel retailers Europeans.
Power cuts could raise prices for Chinese textiles. According to Fibre2Fashion, planned closures – due to China’s struggles with severe power shortages – in industrial centers like Jiangsu, Zhejiang and Guangdong could push up prices for textiles and clothing in the coming weeks.
The Garment Worker Protection Act entered California law. The bill will hold “corporations accountable and [recognise] the dignity and humanity of our workers, ”Governor Gavin Newsom said in a statement. The law will guarantee an hourly wage for California garment workers instead of piecework, which often equates to wages well below the state’s $ 14 minimum wage.
THE BEAUTY AFFAIR
Advent-owned hair care company Olaplex valued at $ 13.6 billion when it went public. The hair product maker’s sales grew 90% year-over-year in 2020, while adjusted net profit reached $ 131 million in the same period, from $ 100.5 million a year earlier, according to a recent regulatory filing.
Estée Lauder Ends Designer Fragrance Licensing Division. The beauty group’s Aramis and Designer Fragrances (ADF) division has licensing agreements with Donna Karan, Michael Kors, Tommy Hilfiger and Ermenegildo Zegna, all of which will end in June 2023. Capri-owned Michael Kors has previously announced that it has signed a 15-year contract with the Italian perfume manufacturer EuroItalia, which counts Versace among its partners.
Everlane appoints Andrea O’Donnell as CEO. The founder of the direct-to-consumer brand, Michael Preysman, will step down as CEO to take on a sustainability-focused role as executive chairman and “climate activist”. O’Donnell comes from Decker Brands, parent company of labels such as Ugg and Teva, where she was president of the Ugg brand.
Vanessa Kingori MBE takes on new roles at Condé Nast. Former British Publishing Director Vogue – as well as the title’s first-ever female business manager and black editor at Condé Nast Britain – was appointed Business Director of Condé Nast and Vogue European business advisor. In his new roles, Kingori will lead sales teams in the UK and across all Condé Nast brands as the company continues to restructure.
Kering appoints Thierry Marty President of North Asia and South-East Pacific. In the newly created position, Marty will oversee the development of the French luxury group in markets such as Japan, South Korea, South East Asia, Australia and New Zealand. He will be based in Seoul and will report to the CEO of the Kering group, Jean-François Palus.
Burberry appoints new chief digital and analytics officer. CP Duggal, who recently led the digital and analytics organization of American Express, will join the executive committee. For now, he will report to Burberry Managing Director Marco Gobetti and eventually report to his successor once Gobetti joins Ferragamo at the end of the year.
MEDIA AND TECHNOLOGY
ByteDance is reportedly launching a cross-border e-commerce platform. Chinese media The passage reported that the company, which owns Tiktok and Douyin among other apps, plans to unveil an e-commerce app for international consumers in October, which would be an attempt to tackle Alibaba’s AliExpress market.
Macy’s is suing to stop advertising on Amazon billboards near the New York flagship store. Macy’s stated that Kaufman Realty Corp. was in conversation with a “major online retailer,” which she said is Amazon, months before her contract for the billboard expired in August. Competing retailers are prohibited from advertising there under an agreement signed in 1963.
Compiled by Joan Kennedy.