Last week rental brands held up well despite inflation and rising costs. Richemont finally unloaded the costly burden that was Yoox Net-a-Porter, paving the way for Farfetch’s continued rise. Also: Victoria’s Secret tried to turn bad press into good press, and Coty had a strong second half.
Don’t forget to subscribe to the Glossy Podcast for Week in Review episodes 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 Editor-in-Chief Priya Rao. –Danny Parisi, sr. fashion journalist
Renting has surprisingly good fun
Buried in Urban Outfitters’ earnings this week – under the fact that the company is making more money than ever, but its profits continue to decline – was the bright spot for Urban’s rental company Nuuly, which exceeded 100,000 subscribers during the quarter.
In fact, Nuuly is doing quite well for Urban, with sales increasing by nearly $19 million in the quarter and over $30 million in 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 is doing well. People usually rent clothes when they go out frequently or have events. This is also a segment where shipping clothes back and forth is one of the biggest expenses.
But other rental services also work well. In June, Rent the Runway exceeded all revenue forecasts, increasing revenue by 100% year over year. This success is partly due to the reform of its subscription model last year, which nearly doubled its profit margins.
Richemont x Farfetch x YNAP
Richemont finally unloaded 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 this agreement, all Richemont brands will begin using Farfetch technology to power their e-commerce. Farfetch is already doing the same for other major luxury brands like 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 several more lucrative e-commerce offerings to its portfolio.
Victoria’s Secret takes on the critics
Victoria’s Secret hasn’t had the most positive press in recent months. Along with the Hulu documentary about the brand that delved into its deleterious effect on women’s body image and the ties between its owner, Lex Wexner, and Jeffrey Epstein, a viral TikTok song by singer Jax titled “Victoria’s Secret” blasts the impact of the brand on young women.
But according to Victoria’s Secret CEO Martin Waters, the brand welcomes attention.
“It keeps us in mind. And that’s a good thing,” Waters said during a press call Thursday.
Victoria’s Secret responded openly to Jax’s song on Instagram, embracing the content of the song and trying to absorb rather than deflect criticism. This aligns with Victoria’s Secret’s overall rebranding efforts to become a more progressive brand.
His response to the documentary, however, was different.
“It actually had very, very low viewership numbers. [and] even lower completion of the series,” Waters said. “And the relatively few people who made it to the end of the series had a stronger perception of the brand coming out of it than going into it.”
Coty takes off thanks to travel retail
The lipstick effect has never been so literal. Faced with high inflation and rising costs, Coty’s revenue rose 10% last quarter, beating analysts’ estimates and positioning the beauty company for strong, stable growth for the rest of the year.
Estée Lauder and L’Oreal, Coty’s main rivals, also had strong quarters.
Coty CEO Sue Nabi attributed the company’s growth to strong sales in e-commerce and travel retail.
“I really hope everyone recognizes these eight quarters of results meeting or beating expectations as a great achievement,” Nabi said in an earnings call Thursday.