Thursday, May 29, 2014

Sartorial Statements: Fashion News Roundup

It's been a while since I did one of these, but since the June window for IPOs is now upon us, and the M&A market is still extremely hot, it's time to check in and see what's going on in the business world of fashion.

Starting off with news that will make LOTS of people happy, J. Crew has announced they are moving back into Asia by opening two stores in Hong Kong. This is in addition to the fourth London store they are planning to add this fall. In addition, J. Crew plans to launch a budget store called J.Crew Mercantile. My guess is that this is  an attempt to diversify the brand's reach so it can compete for the lower-budget consumer who frequents H&M and Forever 21 without diluting the core J. Crew brand. It may also be an attempt to simply generate more revenue, as J. Crew has begun to rely heavily on sales and discounts (though they are definitely trying to control that and are maintaining their high-end status by never offering more than 30% off). Rumors of an IPO are still being floated, but the CEO Mickey Drexler appears to be content with the direction the company is going in at the moment.

While the big news on the street is Alibaba's coming IPO (rumored to be the largest IPO ever in the US - between $150-$250 billion), other e-commerce sites are jumping to cash in on the positive IPO market. Coupang, a Korean e-commerce site, is now being valued above $1 billion and is expected to announce $100 million new round of financing. Tradesy, an online consignment shop for luxury items, has just announced a $13 million Series B investment with backers that include Richard Branson. 

In the world of M&A, Apple Inc. has confirmed that it is buying Beats Music and Beats Electronics for $3 billion. While headphones aren't technically clothing, they are definitely an item that is considered "trendy" and, similar to watches, could be classified as an accessory, particularly for those of us who live in big cities and have our headphones on constantly during our commutes. For real fashion M&A, check out the Cocosa deal. Cocosa is a luxury flash sale site that was owned by Mohamed Al Fayed, who used to own Harrods and whose son died in the car with Princess Diana. Al Fayed has just sold Cocosa to MySale, an Australian flash sale site who is planning to expand into the UK. MySale is hoping to take advantage of the counter-seasonal trends, figuring that, for example, it can sell excess summer merchandise to Australia in September (when Australia is having its summer).

Overall there aren't any super interesting announcements, as most of the big luxury good companies are lying pretty low after a fairly active spring. I'm still hoping that J. Crew does an IPO and desperately needs a London-based junior associate to help out :-P

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