Why Is Vestiaire Collective Crowdfunding?

Vestiaire Collective’s announcement of a crowdfunding campaign earlier this week raised some eyebrows.

The luxury platform’s previous backers were the opposite of grassroots: it’s raised $744 million over 12 rounds, including one in 2021 that included Kering and Tiger Global Management, one of the world’s biggest backers of start-ups. One million euros ($1.09 million) in small contributions from individuals is a departure, to say the least.

Before jumping to any conclusions about the impact of high interest rates or the luxury slowdown on resale start-ups, we figured it was best to ask Vestiaire chief executive Max Bittner about the motivations behind the campaign.

Turns out, it’s not really about the money.

“It’s a drop in the bucket,” chief executive Max Bittner told The Business of Fashion. “This fundraiser was not even the idea of the finance department, it was the idea of the marketing department.”

It’s a tactic that has been tried before, including by AllBirds in 2016 before it eventually listed in 2021. Not only does it make noise in the market and boost ties with loyal customers, the sacrifice is minimal: companies are typically not obliged to appoint a crowdfunding representative to their board and shares do not carry voting rights.

Vestiaire has its eyes on bigger investors down the line, of course. The start-up, founded in 2009 in Paris, is reportedly aiming for an initial public offering in 2025.

That may prove a tougher sell. The track record for fashion resale platforms on the stock market is pretty dismal. Poshmark hit a peak valuation of $7.5 billion when it listed in January 2021, but its share price fell more than 80 percent before it was acquired by Korean e-commerce company Naver in October 2022. Shares of The RealReal trade around $2 after debuting above $30 in June 2019.

Competition is fierce, particularly in the US, where Vestiaire is in the middle of an aggressive expansion push headed by Samina Virk, who was appointed a year ago, and Bittner himself has also relocated to New York from Paris. In addition to Poshmark and The RealReal, there’s Depop, still going strong under Etsy, numerous niche start-ups competing to re-sell bags, jewellery and other categories. Brands such as Maje, Sandro, and Lululemon have their own direct secondhand sales now. Peer-to-peer rental services such as Pickle, By Rotation and Tulerie have a similar proposition of luxury for less, while Shein and Temu offer dupes by the thousands.

And of course there’s eBay, the original secondhand giant, which has recently stepped up its efforts in higher end fashion and watches, including an accessories verification programme in partnership with various brands. It also held an offline pop-up “Canal Street Wear,” which featured clothing from top-rated eBay sellers. (Ebay has had its own struggles, announcing this week it would cut 9 percent of its workforce, about 1,000 employees.)

Still, there are reasons to be optimistic that Vestiaire Collective can succeed where The RealReal couldn’t (or at least, hasn’t yet). The “normalisation” of luxury spending flagged by LVMH this week is in part the result of aspirational consumers being priced out of buying new Hermes or Chanel bags. In another bad sign for luxury brands, this past week, the four biggest US banks reported higher credit card spending in 2023 compared with the previous year, and that cardholders were taking longer to pay down their debt, according to analysis this week by The Wall Street Journal.

Those newly cash-strapped shoppers might now turn to resale sites for bargains. Vestaire Collective’s revenue grew a healthy 25 percent in 2023, according to Bittner, slower than it was two years ago but showing signs of picking up. The company is also on track to be profitable sometime this year, he said.

“Of course, we have an environment where people are more cautious but if anything, we’ve seen actually an improvement of the environment over the last, I would say, four to eight weeks,” he said. “The business is as healthy as I’ve seen it in the last five years since I’ve been here.”

Bittner said he’s more focused on executing his existing plan than the wider universe of resale, rental, fast fashion, new luxury and beyond.

“If my competition is everything from the first market of Hermes to Shein and Temu then I’m going to go crazy,” he said. “I don’t need to launch new markets and launch new categories. I don’t need to pivot. I just need to do more of the same. And that will get me to where I need to be by the end of 2024.”

THE NEWS IN BRIEF

FASHION, BUSINESS AND THE ECONOMY

LVMH’s fourth quarter sales grow 10 percent. The group’s key fashion and leather goods division reported 9 percent growth, in line with the previous quarter. Full-year operating profit grew 8 percent to €22.8 billion euros ($24.7 billion).

Ferragamo CEO warns turnaround may take longer after 2023 sales drop. Sales fell by 8.1 percent at constant currencies last year. Revenues reached €1.16 billion ($1.58 billion) in 2023, a touch above the €1.15 billion estimated by analysts according to an LSEG consensus.

Shein backers offer to sell at 30 percent discount as IPO prospects dim. Investors are trying to sell shares in private market deals that value the online fashion giant at as low as $45 billion. The latest offers show how the gap is widening between market appetite and Shein’s target of up to $90 billion in an initial public offering.

Swatch raucous analyst call pits CEO Hayek against investors. The company hit back at investors who’ve called out the firm for its governance and management practices, accusing them of seeking privileged information. CEO Nick Hayek said if investors are unhappy with the way the company it’s managed and governed, they can invest elsewhere.

China’s luxury market is expected to grow by mid-single digits in 2024, according to new report by Bain and Company. The Hainan region is forecasted to be most impactful in 2024 as luxury brands continue to invest in the island. Luxury labels with a high concentration of wealthy clientele are expected to be most resilient.

Saks operator HBC in talks to raise liquidity and refinance a loan. HBC has also been speaking to potential investors about roughly $50 million in additional debt. The financing would be issued under a $150 million senior secured term loan initially placed in late 2020, though talks are ongoing and plans could change.

Macy’s rejects Arkhouse’s $5.8 million bid. Macy’s said the offer was not financially attractive or credible enough to grant such access. Macy’s is not running a sale process with other parties and no other unsolicited bidders have emerged that meet the company’s expectations about a potential deal.

Amer Sports to weigh raising up to $1.8 million in US IPO. The company could market about 100 million shares in a range of $16 to $18 each. Terms of the potential offering may be announced as soon as in the coming days, people with knowledge of the matter said.

Superdry losses balloon as retailer struggles to compete. The company’s stock, which had fallen 89 percent in a year, rose 2.5 percent in early trading. Superdry’s adjusted loss before tax grew to £25.3million ($32.1 million) in the first half, compared with around £14 million a year earlier.

Swatch group dashes dividend expectations and shares tick lower. The company posted sales rising by 5.2 percent last year to 7.88 billion Swiss francs ($9.10 billion). Earnings fell short, with operating profit of 1.19 billion francs missing forecasts for 1.32 billion francs, according to LSEG data.

Levi Strauss to cut jobs after projecting bleak 2024 on fragile wholesale business. Shares of the company fell more than 5 percent in extended trading. The denim maker said it would cut 10 percent to 15 percent of its global corporate jobs.

Primark holds prices steady after Rita Ora helps lift sales. The company said sales at UK stores rose 3.8 percent fuelled by The Edit and Rita Ora ranges. Globally Primark’s sales rose 7.3 percent to £3.4 billion in the period, helped by store openings in the US and Europe.

Retail start-up Neighborhood Goods shutters all four stores. Launched in 2018, the company has raised more than $25 million in funding. In early January, Neighborhood Goods closed its stores in Plano and Austin, Texas.

Levi Strauss sues Brunello Cucinelli over trademarked tab. The lawsuit seeks to end sales of infringing products, unspecified damages including lost profits, and other remedies. Levi said repeated attempts to resolve the dispute without litigation were unsuccessful.

Matthew Williams sets new strategy for 1017 ALYX 9SM. The label will bring fresh focus to its womenswear offer, shift its base of operations to Paris, and return to the Paris Men’s Fashion Week calendar. It will also double down on its direct-to-consumer business.

THE BUSINESS OF BEAUTY

Unilever’s US and European market share slips as private label booms. The company’s underlying price growth was 13.3 percent at its height in the fourth quarter of 2022. In the United States, Unilever’s body wash business, which includes Dove products, lost the most market share – down 510 basis points.

Givaudan sales surge to $8 billion. Growth was especially seen in its fragrance and beauty division, where sales grew 7.6 percent to CHF 3.3 billion ($3.8 billion). Fine fragrances were up 14 percent. The company noted “sustained high levels” of new business for its fine fragrances division.

Ultra Violette secures AUD $15 million investment from Aria Growth Partners. The Australian sun care brand hopes the capital will aid in product innovation and global expansion. Ava Chandler-Matthews and Rebecca Jefferd, the brand’s founders, will remain at the helm.

P&G’s strong margins take heat off annual profit forecast cut. The company’s net sales rose 3.2 percent, missing LSEG estimates, due to slowing demand for products including beauty brand SK-II in its second-largest market China. The company’s core profit came in at $1.84 per share, beating estimates of $1.70.

Bridgepoint acquires anti-ageing brand Roc Skincare. The deal was for around $500 million, one source said, speaking on condition of anonymity. Bridgepoint, which has €39.5 billion ($43 billion) of assets under management, has made similar investments including its purchase of French cosmetics company Vivacy in 2022.

Pamela Anderson purchases stake in Sonsie Skin. She shares a stake in the company alongside founders Marie von Behrens-Felipe and Roberto A. Felipe, who launched the brand in June 2023. She joins the company as co-founder and co-owner.

Hair and scalp line Jupiter secures $3 million in funding round. Willow Growth Ventures and Springdale Ventures participated in the extended seed round. Funding was previously raised in a 2019 pre-launch round, with additional rounds in 2021 and 2022.

PEOPLE

LVMH’s Arnault set to propose sons Alexandre and Frédéric for company’s board. The board nominations would then be subject to a vote at the company’s annual general meeting in April. Arnault and his family own about 48 percent of LVMH shares and nearly 64 percent of voting rights.

Kim Kardashian returns as Balenciaga ambassador. Kardashian’s ties with Demna and Balenciaga were called into question in November 2022 following an advertising scandal. “I’m excited about this next chapter for the brand,” Kardashian said.

Sephora Greater China head steps down. Maggie Chan has stepped down after five years with the company. No successor has yet been named to lead the LVMH Group-owned beauty retailer in the Chinese market.

MEDIA AND TECHNOLOGY

Florida lawmakers vote to restrict children’s access to social media. Passed by a bipartisan vote of 106 to 13, the measure would require social media platforms to terminate the accounts of anyone under 17 years old. The bill would also require firms to permanently delete personal information collected from the terminated accounts.

Anne Hathaway walks out of a Vanity Fair photoshoot in union solidarity. About 400 union members at Condé Nast downed pens in a protest at the way the publisher is negotiating over layoffs. Hathaway was on the premises for a photoshoot on Tuesday morning.

Italy tightens charity giving rules after influencer Ferragni scandal. The bill is due to be approved on Thursday and stipulates that products linked to charity donations should indicate the purpose and recipient, and make clear the share of the price going to charity. The law envisages fines of up to €50,000 ($54,500) for those who fail to respect such obligations.

Compiled by Yola Mzizi.