Modish Issue #1: Q3, Q4, and the End of 2020

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Issue #1: Q3, Q4, and The End of 2020

© 2021 Carolyn Hammond

JANUARY 13, 2021


Welcome to

Issue #1







2020: A Year to Remember In a year ravaged by the ongoing effects of COVID-19, the market saw both record highs and record lows. In March, the S&P 500 dropped more than 3000 points, triggering one of the largest sell-offs since the Great Depression. Lockdowns forced already-ailing retailers to shutter their


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storefronts for months on end, while discretionary spending simultaneously fell as employees were laid off or furloughed until further notice. The fashion industry was particularly ravaged by the effects of COVID-19. Forced to close storefronts, companies without a strong online presence were completely incapacitated, forced to scramble together a digital platform or to just sit by idly waiting for lockdowns to be lifted. Some players, including fast fashion giants like Boohoo and Zara, still managed to fair well, as did e-tailers like Farfetch and Yoox-Net-a-Porter. And, even with shuttered stores and a huge drop-off in the purchase of luxury goods, giants like LVMH and Kering still managed to recoup their losses by Q3 of the fiscal year. However, many companies were not as lucky. Smaller luxury houses, lacking the cushion of a larger parent company, have been pushed to the brink of bankruptcy, their regular client base evaporating and their small online presence dwarfed by e-tailer competitors. Department stores have also been pushed beyond their limits, with many of them, such as iconoclastic Neiman Marcus, forced into bankruptcy. Unfortunately for many companies, COVID-19 merely divulged their crumbling business models and pushed their overwhelming debt past its narrow limits. However, as we leave 2020 behind and enter into a new fiscal year, it’s time to look to the future to see what’s in store for the fashion industry. In this issue of Modish, I take a look back at 2020, examining its highs and lows, before taking a look ahead to the fashion industry’s prospects for 2021. So, here’s to a 2021: a new year characterized by innovation, prosperity, and most importantly, vaccines.


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Letter from the Editor Welcome to Modish! My name is Carolyn Hammond and I’m so excited to be publishing the first issue of my passion project, Modish. I have always loved fashion; specifically, fashion business. I also love writing. For the past two years, I have been a staff writer for my school’s fashion magazine and online blog, where I write a weekly column on current events in the fashion industry. I first created Modish—which means “fashionable,” or, “instyle”—when I was twelve; it was a fashion magazine based on my favorite publication, Vogue. I delivered it to Vogue’s New York office while there for Thanksgiving, but never heard anything back from Anna Wintour, much to my disappointment. Now, many years later, I’ve reimagined Modish, combining my interest in fashion business with my love of writing to create a quarterly publication that includes research, analysis, and editorial, all in one. It’s the ultimate fashion business rundown. With that, I hope that you all enjoy the first issue. Thank you for your support and I look forward to many more Modish issues in the future.

Sincerely, Carolyn Hammond Editor-in-Chief of Modish


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In this Issue 2020 in Review Fast Fashion Rules……6 Taking Stock: Boohoo Group, H&M, Inditex……6 Editorial: Fast Fashion Unfettered……7 Conglomerates Falter……13 Taking Stock: LVMH, Kering, & Richemont……13 The Run on Bankruptcy……14 Editorial: The Chapter 11 Curse……15

Looking ahead to 2021 2021: The Year of M&A……19 Editorial: The Prada Predicament……20 E-Commerce Insanity……23 Editorial: The (Online) Space Race……24 Stocks I’m Watching……27 Taking Stock: Farfetch, Revolve, & Shopify……27

Final Thoughts What to Expect in Q1 FY 2021……28 References, Citations……29


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Fast Fashion Rules # of customers, orders; in millions

Huge growth in 2020

Revenues, 2018-2020 £1,400 Group Revenue (in millions of £)

Boohoo Group

In a year full of restrictions, fashion’s mosthated companies came out on top.

80 61.25 42.5 23.75 5

Active customers # of Orders



£900 £650 £400





Boohoo, the parent company of NastyGal, PrettyLittleThing, and eponymous Boohoo, managed to post huge increases in revenue as well as massive growth in their active customer base amidst the pandemic. Thanks to its social media savvy, sustainability initiatives, and flexible business model, Boohoo rode out the pandemic in style.


While not as successful as Boohoo, H&M still fared remarkably well given that more than 3,000 of its 5,000 stores were closed for the first half of the fiscal year. During Q2, from 1 March to 31 May, net sales dropped a whopping 50% compared to Q2 of 2019. However, in Q3, H&M’s net sales only decreased 16% compared to Q3 of the year prior, and declined only 10% in Q4, showing a tremendous rebound on the year. Despite a decline in sales, H&M managed to increase online sales threefold in the first nine months of 2020.

SEK80,000 Net sales (in millions of SEK)


Net sales, 2019-2020

SEK65,000 SEK50,000 SEK35,000 SEK20,000






Net sales (in billions of €)


Net sales, 2019-2020 €20

While Zara’s net sales, like those of H&M, fell in the first nine months of the fiscal year, its online sales increased by an astonishing 74%. Additionally, thanks to fast fashion’s extraordinarily flexible business model, Inditex was able to decrease its inventory by 19% and increase its cash position by 7%, reaching a historic cash position for the group of €8.3 billion. Finally, despite consistent losses in net sales, Inditex, like other fast fashion groups, is staging a strong rebound.

€15 €10 €5 €0

Q2 2019

Q3 2020


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Fast Fashion Unfettered Originally published on, September 29th, 2020

People have long enjoyed shaming fast fashion. The black sheep of the fashion world, fast fashion giants like Boohoo, H&M, ASOS, and Inditex are consistently criticized for stealing their designs from established brands and engaging in unsustainable practices. In most cases, accusations like these are wholeheartedly inaccurate and based on practices from long ago. Furthermore, these complaints only surface in environmental debates where protesters, eager to hate on luxury, reach for the lowest hanging fruit. However, as COVID-19’s far-reaching effects continue to roil the fashion industry, fast fashion brands have come out stronger than ever, bucking all industry trends. While iconic brands have been crushed under the increasing weight of prolonged store closures, consumer wariness, and an expensive backlog of inventory, fast fashion has used its flexible business model to its advantage, pivoting its production toward lockdown categories and expanding its already-massive online presence. Of the major fast fashion groups, ASOS and Boohoo have been the most successful during the pandemic. Amazingly, both conglomerates beat their 2019 results. In its trading statement for the period ended on June 6th, 2020, ASOS recorded revenues of £1.014 billion, a 10% increase compared with the same period in 2019. The group’s active consumer base also increased to 23 million people, up 16% on the year. More impressively still, despite demand for occasion wear—ASOS’s best category—dropping due to quarantine, the group reported a 15% item growth; meaning that customers bought 15% more on average than they did in 2019. Finally, and most impressively, ASOS reported its strongest month on record for its social media platforms, boasting a 90% increase in activity during the month of May with over 9 million likes, comments, and shares.


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ASOS's 1 year stock performance. Photo credit: Yahoo Finance

Boohoo posted similarly unbelievable results. In its 2020 Annual Report, the group, whose most notable brands include Pretty Little Thing, Nasty Gal, and Boohoo, reported £1.235 billion in revenue, a staggering 44% increase from the year prior. The brands’ individual performances were just as impressive. Pretty Little Thing (PLT) posted a 38% increase in revenues and a 26% increase in its active customer base. Boohoo’s revenues also increased by 38%, while its active customer base shot up 28%. Cult-favorite Nasty Gal boasted a whopping 106% increase in revenues and a staggering 88% growth in its active customer base. In addition to its stunning results, Boohoo’s CEO, John Lyttle, highlighted the group’s continued automation of its 2 distributive facilities—making its shipments even faster and its business model that much more efficient—as well as its recent expansion of its in-house app development team.

Boohoo Group PLC's 1 year stock performance. Photo credit: Yahoo Finance

Though they didn’t beat their 2019 results, Inditex and H&M performed well, showcasing the enviable flexibility of the fast fashion business model. In its 6-month financial presentation, reporting activity from February 2 to July 31, 2020, Inditex—owner of Zara, Pull&Bear, Massimo Dutti, Berksha, Uterqüe, and Stradivarius—posted net sales of €8 billion, compared to €12.8 billion during the same period in 2019. This led to a loss of €195 million for the first half (H1) of 2020, compared to a net income of €1.5 billion during H1 !8

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2019. Despite this drop, the group’s business model has allowed it to better adapt to the pandemic than those of artisanal and specialty brands. During H1 2020, the group’s online sales rose by a stunning 74%, and its supply chain remained completely uninterrupted during the pandemic. And, while most brands became inundated by immobile inventory, Inditex’s inventory declined 19%, as it was able to quickly adapt its rate of production to the sudden drop in purchases.

Inditex's 1 year stock performance Photo credit: Yahoo Finance

H&M posted a 23% drop in net sales for H1 2020, but a 36% increase in online sales, a trend that has continued even as the brand’s physical stores have begun reopening, according to Helen Helmersson, H&M’s CEO.

H&M Group's 1 year stock performance. Photo credit: Yahoo Finance

Ultimately, all four of these fast fashion groups have put traditional fashion conglomerates, like Tapestry and Capri, to shame. In its 10k form filed on August 13, 2020, Tapestry—which owns Kate Spade, Stuart Weitzman, and Coach—reported an alarming net loss of $652.1 million, compared to a net income of $643 million a year prior. The group also reported a loss in operating income of $550.8 million, compared to a gain of $819.7 million during the same period in 2019. These disappointing numbers, along with operational issues and


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the group’s lacking online presence have left investors worried for the group’s long-term success.

Tapestry's 1 year stock performance. Photo credit: Yahoo Finance

Capri—which owns Versace, Jimmy Choo, and Michael Kors—posted similarly abysmal numbers for the period ending June 6, 2020. The group reported revenues of $451 million, a 66.5% drop from the same period a year prior, and a net loss of $180 million, compared to a net income of $45 million in 2019. Not only did each of the brands incur massive operating losses, but they each saw huge declines in revenue; Versace declining by 55.1%, Jimmy Choo by 67.7%, and Michael Kors by 68.7%.

Capri Holdings' 1 year stock performance. Photo credit: Yahoo Finance So, why is fast fashion winning? And, better yet, why are some fast fashion groups thriving in the panic-ridden coronavirus market? From my perspective, fast fashion is winning for 6 big reasons: 1.) Pricepoint

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In a time as economically insecure as COVID-19, few people are on the market for a new pair of Jimmy Choo pumps or a Versace handbag. When the market is volatile, consumers get scared. As a result, they hunker down, free up cash, and cut back their nonessential spending. Unfortunately for high fashion, that means cutting back on big purchases. Fast fashion thrives on these scared consumers, who go to H&M and Zara looking for something that looks high fashion, but won’t break the bank. 2.) Online Presence Unlike luxury and heritage brands who market themselves to a small, loyal consumer base through magazine spreads, private sales events, and first looks, fast fashion commands social media, advertising on Instagram posts, Snapchat stories, and Facebook feeds. The ability to reach a wide range of consumers through social media makes fast fashion accessible to everyone. Think about it: thanks to Instagram, you can literally shop the sweater you saw on H&M’s page in 2 clicks. 3.) Constant Newness Boohoo boasts that its brands launch new styles every single day. This means that if you were to shop Boohoo every day, you would never repeat a purchase. For fast fashion’s target audience, dropping new styles every day is far superior to waiting for a new collection to drop every six months. When there’s always something new to shop, people will always be shopping. 4.) Collabs While Nasty Gal does collections with Emily Ratajkowski, Ariana Grande, and Saweetie, high fashion rarely does collaborations. Sure, Kendall Jenner is the face of Versace, but the bag she’s holding isn’t Kendall x Versace. Without collabs, it’s difficult for brands to build hype, which is what fast fashion’s target audience lives for. 5.) Efficiency, efficiency, efficiency

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The fast fashion business model is truly unbeatable. While heritage brands like Coach have to source the highest quality leather for its bags, hire workers capable of handcrafting its bags, and roll out an extended production timeline for each item because they are handcrafted, fast fashion has no such road blocks in the production process. This allows them to automate their supply chains, expedite production, and drive down production costs in a way that is impossible for iconic brands. 6.) Sustainability Initiatives Finally, fast fashion is changing its image. While it has long been associated with waste, brands like H&M and Nasty Gal are changing this. Recently, H&M has been running ads showcasing its increased use of recycled materials; from a shirt made of orange peels, to shoes made of recycled glass beads, to a dress made from 100% recycled polyester. In addition to using recycled products in its new collections, Nasty Gal has introduced Nasty Gal Vintage, a curated collection of vintage pieces from both the brand’s past collections as well as those from outside labels. In closing, fast fashion is nothing to scoff at. While iconic brands like Stuart Weitzman and Coach have struggled mightily to attract even their loyal consumer base, fix their interrupted supply chains, and drive down their operating costs, fast fashion has defied all expectations in a market beholden to the woes of COVID-19, demonstrating the importance of a flexible business model, a dominant online presence, and accessible prices for even the most unconfident consumer. Iconic brands may fade, but fast fashion is here to stay.

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Conglomerates Falter

Revenues by Sector Q3 2019

Q3 2020

Wines & Spirits

These luxury giants remained strong, but still struggled under the pandemic’s pressure.

Fashion & Leather Goods Perfumes & Cosmetics Watches & Jewelry

Revenues (in billions of €)


Q1-Q3 Revenues, 2019-2020

Selective Retailing





Revenues (in millions of €) With a market cap of over $300 billion, it’s not surprising that


LVMH more than survived the pandemic. While it faced a tough Q2 , the iconic French conglomerate rebounded in Q3, its revenues declining only 7%, missing its Q3 2019 results by less than €2 billion. And, despite suffering a 31% decline in its selective retailing revenues, the group’s new digital initiatives helped buoy the group.

€8.000 €6.000



Q2 2019

Q3 2020

Kering also posted strong numbers despite the seemingly-eternal shutdowns forced by COVID-19. At the end of Q3, the group reported €3.7 billion in revenue for the fiscal year, down only 1.2% compared with the same period in 2019. In Q1, the group’s revenues decline 16.4%, and then 43.7% in Q2. However, with an increase of 42.5% between Q2 and Q3, Kering only missed its 2019 numbers by 1.2%.

Revenues (in billions of €)


Revenues, Q3 2019-2020

Most excitingly, Kering’s e-commerce soared. In Q1, the group saw a 21% increase in e-commerce, followed by an astonishing 72% uptick in Q2, and a stunning 102% surge in Q3.


Gross Profits & Net Cash, 2019-2020

Gross Profit

Net Cash






€4.000 €3.750 €3.500 €3.250 €3.000

Group Revenue

Luxury Revenue

Q3 2019

Q3 2020

Of the three, Richemont had the toughest year. Not only were its net sales down 26% when its interim results were posted on 30 September, but its gross profit had declined by 31%. Jewelry was the company’s most resilient category, posting only a 13% loss in sales. However, Richemont increased its net cash significantly, to a whopping €2.1 billion—a €400 million increase from 2019. Unlike LVMH and Kering, Richemont invested €1 billion in Farfetch, jointly with Alibaba to create Farfetch China. This new venture will give Richemont a huge advantage over its conglomerate competitors in the online space.

Profits and Net Cash (in billions of €) End of Q3, 2019

End of Q3, 2020

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The Run on Bankruptcy As a result of lockdown restrictions caused by COVID-19, numerous historic brands and centuries-old companies have been forced to shutter. For many, the stress of COVID-19 simply exposed their weaknesses, pushing their ailing business models past their limits. Here is a timeline of bankruptcies in 2020, featuring some of the most iconic, beloved brands. (Information Credit: The Fashion Law)

May 2020 -J. Crew -J. Hillburn

July 2020

-John Varvatos -ALDO -Neiman Marcus -JC Penny

August 2020 -Lord & Taylor

-Lucky Brand -G Star Raw -Brooks Brothers -Ascena Retail (Ann Taylor, Justice)

September 2020

-Men’s Warehouse -Jos. A. Banks

November 2020 -Furla

-Century 21

December 2020 -Francesca’s


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The Chapter 11 Curse

Originally published on, September 10th, 2020.

Thanks to COVID-19, the luxury market has been forced to face its greatest fear: eternal storefront closures, a complete lack of consumer confidence, and broken supply chains. As a result, coronavirus’s far-reaching effects have claimed some of the biggest names in fashion. Unfortunately, the worst may be yet to come. Prior to March of 2020, the fashion industry had already had a tough go of it, losing iconic department store chain Barneys New York in August of 2019, French luxury label Sonia Rykiel in July of 2019, and American teen favorite Forever 21 in September. After such a dismal 2019, analysts had high hopes for 2020. However, just as the fashion industry regained its footing, COVID-19 hit. The pandemic lead to shuttering boutiques and forced an industry that thrives on its tactility and in-store experiences to operate completely online. As these mandatory closures drag on and consumer confidence wains thanks to the hyper volatility of the market, independent labels have drowned in debt. As a result, COVID-19 has forced some of the most recognizable fashion conglomerates and brands to file for Chapter 11 bankruptcy.

A couple shops Barneys New York's going-out-of-business sale in 2019. Photo credit: New York Post

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Of the myriad brands that have filed, a few stand out. One of the biggest names to fall was Neiman Marcus, the historic department store chain started in 1907 in Dallas, Texas. With Neiman’s went Bergdorf Goodman, its sister store. J.C. Penney and Lord & Taylor, both classic American department stores, also filed for Chapter 11 in May of 2020 and August of 2020, respectively. In addition to department stores, who were arguably the hardest hit by seemingly-eternal closures, independent labels including Brooks Brothers, J. Crew, Lulu Guiness, ALDO, John Varvatos, True Religion, G-Star Raw, and even Diane von Furstenburg’s London-based studio all filed for Chapter 11 bankruptcies. While it is sad to see many of these brands go under, for most of them, COVID-19 simply brought their underlying problems to light, pushing their unsustainable debt over the edge. However, as COVID-19 continues to wreak havoc on consumer confidence and reopening plans are pulled back, once-safe luxury brands are beginning to feel the heat. Unfortunately, if they continue underperforming and operating at unendurable losses, they may be next in line for bankruptcy court’s chopping block.

A man walks by a closed J. Crew in New York City. Photo credit: The New York Times

Small, family-owned brands like Salvatore Ferragamo and Tod’s have already begun showing worrying signs of decline. According to Reuters, in the first quarter (Q1), Ferragamo’s (SFER.MI: MILAN) sales fell a whopping 30%. In the second quarter (Q2), the brand’s sales fell an eye-watering 60%, with only $442 million in sales. Tod’s (TOD.MI: MILAN) experienced equally abismal results. Not only did its sales fall 30% in Q1, but it released a press release stating it would not be distributing a dividend to its shareholders this year.

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A snapshot of Salvatore Ferragamo's stock performance this year (YTD). Photo credit: Yahoo Finance

A snapshot of Tod's S.p.A. stock performance YTD. Photo credit: Yahoo Finance

Fashion conglomerate Tapestry (TPR: NYSE), which owns Coach, Kate Spade New York, and Stuart Weitzman, has continued its slump, as has ailing department store giant Nordstrom (JWN: NYSE). Before the Dow’s terrifying nearly 3,000 (12.53%) drop on March 16th, Tapestry was trading at $24.35/share, and Nordstrom at $40.54/share. Now, though the companies have started to pick themselves up, the fashion industry has been slow to find its footing in the current economic climate. As a result, reclaiming their former stock prices seems impossible. Currently, Tapestry trades at $14.71, while Nordstrom finished the day at $15.84.

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A snapshot of Tapestry's stock performance YTD. Notice how both of these stocks are in the red. Photo credit: Yahoo Finance

A snapshot of Nordstrom's stock performance YTD. Photo credit: Yahoo Finance

Ultimately, I believe that the list of beloved brands going under will continue to grow as we move through 2020 and into 2021. With uncertainty still gripping consumers and the stock market remaining obnoxiously volatile, even well-insulated conglomerates like LVMH, Kering, and Richemont aren’t safe from the Chapter 11 curse.

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2021: The Year of M&A As we’ve noted, 2020 has seen many companies collapse. Now, forced into bankruptcy, these brands will either sink or swim. Some, like Neiman Marcus and J. Crew, have already exited bankruptcy, coming out as stronger companies better equipped to take on the challenges presented by the ongoing pandemic. Thanks to new investors, debt restructuring, and ditching the deadweight of their discount labels, these celebrated retailers have a new lease on life. However, for those still in the process of bankruptcy, myriad questions remain. Will they, like Neiman Marcus and J. Crew, receive outside investments, or will they be acquired outright by a larger parent company, eager to snap up heritage brands at a bargain? I believe the latter is more likely. In fact, with so many beloved brands failing, 2021 is liable to be one of the biggest years ever for M&A. Unattractive financials coupled with loyal consumer bases and renowned branding make these companies ripe for acquisition by conglomerates like Fast Retailing, Xcel Brands, L Brands, Authentic Brands Group, and many more. High fashion poachers, including LVMH and Kering, will also be on the prowl for faltering luxury brands. While these are typically smaller fashion maisons with a more limited client base, their quality, name recognition, and malleability make them excellent buys. With an expert team and a few million dollars, Bernard Arnault and François Henri-Pinault can transform practically any losing company into a winner. And, even as lockdowns are lifted and restrictions are loosened, the effects of COVID-19 will likely continue to roil the fashion industry through FY 2021 and well into FY 2022. With this continued disruption will come new waves of bankruptcies and a dogfight to claim cut-rate companies.

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The Prada Predicament Originally published on, February 19th, 2020.

In the late ’90s and early 2000s, Prada was arguably high fashion’s hottest label. With its signature triangle logo plate and vibrant nylons, the brand quickly became a pop culture sensation. Celebrities like Kim Kardashian and Paris Hilton toted huge Galleria bags around LA while top models like Kate Moss and Naomi Campbell strutted down the MFW runways in simple slip dresses and mules that instantly became the must-have looks of the season. In recent years, however, Prada has declined in popularity. Once the creator of every “it-bag” on the market, Prada now seems to be following trends, not creating them, a flaw that has translated to the brand’s performance. According to Prada’s H1 2019 report, retail declined by 2%, with leather goods sales only increasing by 1% and footwear revenues remaining stagnant. Most strikingly, Prada reported negative growth in China, its most lucrative market, with sales dropping 2%. In fact, the Prada brand as a whole only increased its earnings by 4%, and the revenues of its sister brand, Miu Miu (also a member of Prada SpA) dropped by a whopping 6%. And, with recent racism allegations that have earned Miuccia Prada and her team sensitivity training, sales are unlikely to improve.

A chart from Prada's H1 2019 report showing an extremely modest increase in sales for Prada, and large losses for Miu Miu. Photo credit: Prada Results Presentation, H1 2019

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In addition to these poor results, the brand’s report demonstrates, in my opinion, an intent to sell. While Prada recognizes its underperformance, it also highlights strides the brand is taking toward “strengthening brand desirability and product value to support long-term sustained growth,” including new wholesale partnerships, creating a “consistent pricing policy,” and getting rid of seasonal markdowns, a tactic that feels like a pitch for potential buyers. The most notable of Prada’s potential preparations for a buyout? The brand’s agreement to sell four company stores in Milan for $72 million, including the brand’s flagship in the historic Galleria Vittorio Emanuele II, a move that, according to Business of Fashion, allowed Prada to report an additional $21 million in profits on the year, offsetting the brand’s poor sales performance.

Prada's flagship store at the famous Galleria Vittorio Emanuele II in Milan, Italy. Photo credit: Prada

With this in mind, who are Prada’s potential buyers? While LVMH is always lurking, their recent acquisitions—Tiffany & Co. and the Belmond Group—were expensive, costing Bernard Arnault a princely $19.3 billion, collectively. Not only that, LVMH already has a full fashion and leather goods portfolio and a stunningly successful heritage leather goods house: Louis Vuitton. Finally, with an overwhelming majority share of the luxury market, an acquisition of Prada’s scale and notoriety could slap Arnault with anti-trust violations, just as his attempt to acquire Hermès did in 2001. Next up, Kering. Though it has not made any major acquisitions recently, the conglomerate’s free cash flow only amounts to about $1.5 billion, while Prada’s valuation sits at $4.8 billion. Additionally, Kering already commands Italian superpower, Gucci, whose revenues skyrocketed to an unprecedented $10 billion last year.

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Finally, there’s Richemont, the smallest of the three. In 2019, the group’s sales increased from around $12 billion to $15.2 billion, with its jewelry and watchmaking sectors bringing in $7.5 billion and $3.25 billion, respectively. And, while the group is heavily invested in the jewelry and watchmaking industries—including famous houses like Cartier, Van Cleef & Arpels, Piaget, and Jaeger-LeCoultre, among others—it lacks a strong presence in high fashion, controlling only two notable maisons: Chloé and Alaïa. In fact, in 2019, Richemont’s fashion and leather goods sector brought in a mere $1.95 billion, nearly 7 times less than that of LVMH.

A visual showing all of Richemont's houses, most of which fall into the jewelry and watchmaking sector. Photo credit: Harrie Waasdorp

Ultimately, I believe that Richemont is Prada’s most likely buyer. With no recent acquisitions and a need to establish its presence in high fashion—especially in leather goods—in order to compete with the likes of Arnault and Pinault, Richemont is not only Prada’s most probable buyer but its ideal buyer. With Richemont, Prada will get the cash infusion it needs, the attention it demands, and the rebranding it deserves so that it can reclaim its 90’s fame and reign supreme once again.

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E-Commerce Insanity

Since online shopping first made its debut in the early 1990’s, e-commerce has steadily revolutionized the fashion industry, increasing accessibility, efficiency, and literally putting shopping at our fingertips. Now, e-tailers overwhelm the fashion industry. From FWRD to SSENSE, to Shopbop and Revolve, fashion has more third-party e-commerce platforms now than ever before. Before the pandemic, while fashion analytics and fashion tech companies were popular investments, they didn’t have as much clout as they do now. Prior to COVID-19, many companies, including more traditional conglomerates like LVMH and Kering, refused a predominantly digital strategy, focusing instead on enhancing their boutique experiences and venturing into experiential retail. However, following the COVID-19 pandemic, e-commerce has become both more crucial and more popular than ever before. With storefronts around the world closed for months on end, the fashion industry was forced entirely online. As a result, those who had a strong online presence survived, and in some cases even thrived, while those who didn’t were crushed under the weight of declining sales, a waning and inaccessible customer base, and plummeting profits. Ultimately, the pandemic has reinvigorated the e-commerce insanity, making independent, third-party e-tailers and analytics companies like Farfetch, Revolve, and Shopify some of the hottest commodities on the market today. Now, the question becomes: Which holding companies will strike while the iron is hot, and which will miss the opportunity completely?

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The (Online) Space Race Originally published on, November 12th, 2020.

On Friday, Business of Fashion announced that Richemont, the luxury Swiss conglomerate, and Alibaba, the Chinese e-commerce giant, had each invested $300 million in Farfetch, a fast-growing British e-retailer, as well as an additional $250 million each in a new joint venture, Farfetch China. This massive deal, totaling nearly $1.1 billion in investment between the two parties, comes at a time when the luxury market, still reeling from the ongoing effects of COVID-19, is trying to figure out how to pivot in order to capitalize on consumerism’s apparent “new normal.” Luxury has long thrived on in-person, boutique experiences, designed to make its customer feel special, enveloped in the lavish culture of heritage brands. However, despite the overwhelming shift toward online retail, Bernard Arnault, Chairman of LVMH, has long stood by his traditional retail approach, citing the group’s boutique experiences as what sets his brands apart from run-of-the-mill retail. Thus far, Arnault’s strategy has worked; however, with quarantines being re-instituted in parts of Europe and many consumers still unwilling to venture out to physical stores, this old-fashioned approach may not hold up for much longer. While nearly all of fashion’s luxury labels are down on the year, LVMH, Kering, and Hermès all saw sales improve during the September quarter as Chinese consumerism rebounded. And, while the Chinese re-awakening is a good sign for the luxury market, especially as we head into the holiday season, this also creates a new race to see who, or rather which group, can capitalize on the renewed confidence of Chinese consumers. Enter: Richemont. The world’s second largest luxury conglomerate and parent company of Cartier and Van Cleef & Arpels, among other brands, has faced the harsh reality of an 82% decline in net profits on the year. However, with sales in China up 83% as of September 30th, overtaking the US as the group’s biggest market, Richemont only posted a loss of 2%

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in the last quarter, according to Reuters. And, with the announcement of the its new stake in Farfetch, the group’s stock rose 8.3% as of 11:26 GMT Friday, offsetting its 17% decline in share price this year.

A promo shot for new Farfetch China venture being launched by Richemont and Alibaba. Photo credit: Alizila

Richemont is already ahead in the online space race, compared to its competitors. Though it boasts more than 75 luxury houses, including soon-to-be-acquired American jeweler Tiffany & Co., LVMH only has one strictly-online retail site, 24s. However, Bernard Arnault’s focus on the in-person customer experience has, thus far, only strengthened his business model, his brands achieving a combined net worth of over $200 billion. Kering, the French conglomerate and parent company of iconic brands including Gucci, Alexander McQueen, and Saint Laurent, does not have an e-commerce-specific site, again focusing its attention on the allure of the boutique experience.

Louis Vuitton's New York flagship, with pieces from artist Jun Aoki. Louis Vuitton frequently brings in artists to redesign their stores for the season in order to create a unique customer experience. Photo credit: Retail Design Blog !2 5

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Richemont, on the contrary, already owns Yoox-Net-a-Porter (YNAP), two different ecommerce sites, with Yoox selling pre-owned designer goods and Net-a-Porter being a premier online luxury department store. As Richemont’s forward-thinking and incredibly tech-saavy Chairman, Johann Rupert, so eloquently put it, “You are either a disruptor or a disruptee [in the luxury market], and I hate being the latter.”

The YNAP offices in Shanghai, China. YNAP continues to be a global leader in luxury e-commerce. Photo credit: Glassdoor

Now, with a large stake in Farfetch, a new China-specific e-commerce venture, and continued success from YNAP, Richemont takes a huge lead in the online space race against its largest conglomerate competitors, an advantage that will continue to pay dividends for years to come. Yet, the question remains, what’s next for LVMH and Kering? Will they follow in Richemont’s footsteps, building their online presence and forging joint ventures in the burgeoning Chinese market, or will they stick to their brick-and-mortar ways? More importantly, how will this decision affect their long-term success? As retail shifts online now more than ever, LVMH and Kering may find that their tried-and-true strategies are now defunct, antiquated, and unable to rake in profits.

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Stocks To Watch Active customers

Active customers, 2019-2020

With the pandemic still looming, I’m focusing on e-commerce companies and their seemingly limitless potential.




Q3 2019



Q3 2020

With more than 500 brands, 18 of which it manufactures,


Revolve is the ultimate online shopping destination. While many have likened Revolve to a fast fashion company, this etailer is anything but, focusing on maintaining a mix of quality, heritage brands as well as new, youthful labels. While Revolve couldn’t have its annual travel circuit of Revolve Houses, it maintained its social media prowess via influencers, beating most of its Q3 2019 numbers and adding nearly 100 million new customers.

$40 $0

Net income

Net sales

Q3 2019

Q3 2020

Results, 2019-2020



ev en ue


ev en ue

Like Revolve, Farfetch beat all of its 2019 numbers despite the pandemic. And, while it was already the site to shop luxury goods—like an online department store, of sorts—Farfetch has since become the premiere site for high fashion. Not only is it home to incredible designers, but Farfetch’s data analytics make it, in my opinion, one of the most lucrative and most savvy fashion companies of today.

$ (in billions)







$ (in millions)


Q3 2019

Q3 2020

$20 $10 $0

Q3 2018

Q3 2019

Q3 2020

Revenue, Q3 2018-2020 $800 $ (in millions)




GMV, Q3 2018-2020

ig ita






Customers, in billions

$160 $ (in millions)


Q3 Net Income & Sales, 2019-2020

$600 $400 $200 $0

Shopify is the ultimate fashion business company. From helping you start your company’s website to providing you with marketing tools and data analytics on your consumer trends, Shopify is the all-in-one business configurator. While it is not an e-tailer like Revolve and Farfetch, Shopify’s value is unmatched. Year-over-year, Shopify continues to succeed, beating its numbers for more than 8 consecutive fiscal quarters.

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Q3 2018

Q3 2019

Q3 2020

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Final Thoughts What to Expect in Q1 of FY 2021…. As a supposed new strain of COVID-19 makes its way through Britain and Europe, our hopes of a complete return to normalcy in 2021 now seem far-fetched (no pun intended). However, even as the UK enters another lockdown and the world begins to hit the panic button again, it is important to bear in mind how far we’ve come since the first wave of COVID-19 in February of last year. When the initial shutdowns were implemented in March of 2020, nobody knew what to do. Businesses feared immediate collapse as retail was taken away from them without so much as a thought, and the entire fashion calendar, including any remaining fashion week shows were thrown out. Ultimately, fashion was faced with a tough reality: It had become irrelevant to a world enveloped by a global health crisis. Now, fashion has once again found its relevancy, even as the pandemic rolls on. Without boutique experiences and its quarterly fashion shows, brands have turned to social media, engaging with their followers through videos, virtual fashion shows, and Q+As with both influencers and brand executives. Through this, fashion has found its place in the pandemic: A creative break from the daily anxiety and fear brought on by COVID-19. As we enter into Q1, I expect that fashion labels’ number of active customers will continue to rise, as will online platforms’ GMVs. Furthermore, I expect online engagement analytics to continue skyrocketing as people are forced—again—to stay home. In regard to Q4 results and Annual Reports, most of which will not be available until March, I expect luxury brands like Louis Vuitton, Balenciaga, Van Cleef & Arpels, and Cartier—to name a few—to have recouped much of their losses thanks to the holiday shopping season. Finally, I expect that other prominent conglomerates will follow in Richemont’s footsteps—if they’re smart—and invest in e-tailers like Shopify. With that, thank you for reading Issue #1 of Modish. I hope you enjoyed it, and I look forward to bringing you a rundown of Q4 2020, the 2020 Annual Reports, and Q1 2021 in Issue #2.

Until next time, Carolyn

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References & More Sources, By Page -(pg. 6) Boohoo Q3, FY 2019 Presentation -(pg. 6) Boohoo Q3, FY 2020 Presentation -(pg. 6) H&M Q3 2019 Presentation -(pg. 6) H&M Q3 2020 Presentation -(pg. 6) Inditex Q3 2019 Presentation -(pg. 6) Inditex Q3 2020 Presentation -(pg. 13) LVMH 9-month Presentation 2019 -(pg. 13) LVMH 9-month Presentation 2020 -(pg. 13) Kering Q3 2019 Presentation -(pg. 13) Kering Q3 2020 Presentation -(pg. 13) Richemont 9-month Presentation 2019 -(pg. 13) Richemont 9-month Presentation 2020 -(pg. 14) “A Running List of Fashion Bankruptcies,” The Fashion Law. -(pg. 27) Revolve Q3 2019 Presentation -(pg. 27) Revolve Q3 2020 Presentation -(pg. 27) Farfetch Q3 2019 Presentation -(pg. 27) Farfetch Q3 2020 Presentation -(pg. 27) Shopify Q3 2018 Presentation -(pg. 27) Shopify Q3 2019 Presentation -(pg. 27) Shopify Q3 2020 Presentation *The above list does not include sources within articles that have already been cited.

Photos, by Page -(Cover/pg. 1) Vogue -(pg. 2) From top left: Business of Fashion, Yahoo Finance, CNBC -(pg. 3) WWD -(pg. 7) Business of Fashion -(pg. 14) Clockwise from top left: MoneyWise, WWD, CNN, WSJ, Business of Fashion, USA Today -(pg. 15) Architectural Glass & Metal -(pg. 19) The Fashion Law -(pg. 20) Logo My Way -(pg. 23) Medium -(pg. 24) Business of Fashion *The above list does not include photos within articles that already have photo credits listed. !2 9