Last week, rental brands proved resilient despite inflation and rising costs. Richemont finally unloaded the costly burden that was Yoox Net-a-Porter, paving the way for Farfetch’s continued ascent. Also: Victoria’s Secret tried to turn bad press into good press, and Coty had a strong second half of the year.
Don’t forget to subscribe to the Sparkle Podcast episodes for the week in review hosted by me and fashion industry interviews hosted by Editor-in-Chief Jill Manoff. And check out the Glossy Beauty Podcast to hear beauty industry interviews with executive editor Priya Rao. – Danny Parisi, sr. fashion reporter
Rent is having a surprisingly good time
Submerged in Urban Outfitters’ earnings this week — amid the fact that the company is making more money than ever, yet its profits are falling — was the bright spot in Urban’s rental company Nuuly, which broke 100,000 subscribers in quarterly.
In fact, Nuuly is doing quite well for Urban, with sales up nearly $19 million in the quarter and more than $30 million over the past six months.
It may seem counterintuitive that at a time when discretionary spending is down and supply chain costs are up, a segment like rental would do well. People usually rent clothing when they go out often or have events. It is also a segment where transporting clothes back and forth is one of the biggest expenses.
But other rental services are also doing well. In June, Rent the Runway beat all of its earnings guidance, growing revenue 100% year-over-year. This success has come in part from reforming its subscription model last year, leading to a near doubling of profit margins.
Richemont x Farfetch x YNAP
Richemont finally offloaded Yoox Net-a-Porter this week in a complex joint venture with Farfetch. While Richemont will be happy to have YNAP and its losses off its books, Farfetch is the real winner of the deal.
As part of the deal, all Richemont brands will begin using Farfetch technology to power their e-commerce. Farfetch already does the same for other prominent luxury brands such as Chanel and Brunello Cucinelli. Now, as part owner (and potentially full owner, in the future) of YNAP, Farfetch has absorbed one of its main rivals and added some more lucrative e-commerce deals to its portfolio.
Victoria’s Secret is taking the criticism in stride
Victoria’s Secret hasn’t had the most positive press in recent months. In addition to the Hulu documentary on the brand that delves into its damaging effect on women’s body image and the connections between its owner, Lex Wexner, and Jeffrey Epstein, a viral TikTok song by singer Jax called “Victoria’s Secret” debunks the influence of the brand. on young women.
But according to Victoria’s Secret CEO Martin Waters, the brand welcomes the attention.
“It keeps us top of mind. And that’s a good thing,” Waters said on a press call Thursday.
Victoria’s Secret publicly responded to Jax’s song on Instagram, agreeing with the content of the song and trying to absorb, rather than avoid, the criticism. This aligns with Victoria’s Secret’s overall rebranding efforts to be a more progressive brand.
However, her reaction to the documentary was different.
“It actually had very, very low viewing figures [and] even lower end of the streak,” Waters said. “And the relatively few people who made it to the end of the streak had a stronger brand perception coming out of it than they did going in.”
Coty grows through travel retail
The lipstick effect has never been more literal. In the face of high inflation and rising costs, Coty’s revenue rose 10% in the latest quarter, beating analysts’ estimates and positioning the beauty company for solid, steady growth for the rest of the year.
Estée Lauder and L’Oréal, Coty’s biggest rivals, also had solid matches.
Coty CEO Sue Nabi attributed the company’s growth to strong sales in e-commerce and travel retail.
“I really hope that everyone will recognize these eight quarters of results at or ahead of expectations as a great achievement,” Nabi said on an earnings call Thursday.
