Revolve Group looks to work its digital marketing prowess on the house of Alexandre Vauthier as it looks to capitalize on luxury’s weak spots.
Executives from the Los Angeles fashion firm detailed why they took a majority stake in the French fashion company during an earnings update last week, which saw the company’s net income jump 111 percent to $15.4 million in the second quarter. Net sales rose 3 percent from a year ago to $282.5 million as the company’s namesake and largest business grew.
In June Revolve Group confirmed it bought Alexandre Vauthier out of administration, snapping up an 80 percent stake in the label and long-time vendor of its FWRD luxury business. Vauthier maintains the remaining 20 percent.
“We view the luxury industry challenges as an exciting opportunity to go on offense and invest in market share capture, supported by our consistent profitability and cash flow generation that sets us apart in fashion e-commerce,” Revolve Group co-founder and co-CEO Michael Mente told analysts last week.
To Mente’s point, Revolve Group’s own luxury division, FWRD has sputtered under a tough stretch for the industry. FWRD reported a 4 percent decline, its fifth straight drop in quarterly net sales, to $36.9 million in the second quarter.
Even with those challenges, the company was in a position to buy, with Mente saying Revolve had its “eye out for opportunities.”
Revolve now gets an haute couture brand, only one of 15 globally. It’s a point Mente highlighted in the earnings call as being “incredibly important to luxury customers.”
“We expect Revolve and FWRD to benefit from the association with the revered luxury brand, while giving us a direct line into the French fashion ecosystem [and] to approximately 30 Alexandre Vauthier employees that are based in Paris,” Mente said.
Laying the Foundation
Alexandre Vauthier requires capital, something Revolve Group has promised with plans to pump 6 million euros ($6.6 million) into the business over the next three years, according to Mente.
Vauthier entered judicial administration in February after defaulting on payments in November, according to a legal notice.
Revolve, seen as a leader in digital marketing, views its expertise as a way of breathing new life into the Parisian company.
Plans are in the works to relaunch the label “with a reimagined new collection in the fall” and a fashion show during Paris Couture Week in January, Mente said.
Revolve also expects to scale the Vauthier direct-to-consumer business, which the CEO said has “historically been very small.”
A new online shop for the label is also in development.
Payoff from the work is expected to begin showing in Revolve Group’s revenue by late this year and into early 2025, CFO Jesse Timmermans told analysts last week.
“With the Vauthier brand coming off a period of underinvestment, in the near term, we understand what we need to invest, ahead of the financial benefits we expect to realize in future years,” Mente said.
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