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Last week, rental brands proved resilient in spite of inflation and rising costs. Richemont finally unloaded the costly burden that was Yoox Net-a-Porter, paving the way for Farfetch’s continued ascendance. Also: Victoria’s Secret tried to turn bad press into good press, and Coty had a strong second half of the year.
Don’t forget to subscribe to the Glossy Podcast for Week in Review episodes hosted by myself and fashion industry interviews hosted by editor-in-chief Jill Manoff. And check out the Glossy Beauty Podcast to hear beauty industry interviews with executive editor Priya Rao. –Danny Parisi, sr. fashion reporter
Rental is having a surprisingly good time
Buried in Urban Outfitters’ earnings this week — beneath the fact that the company is making more money than ever, but still found its profits falling — was the bright spot in Urban’s rental company, Nuuly, which broke 100,000 subscribers in the quarter.
In fact, Nuuly is doing quite well for Urban, with sales increasing by close to $19 million in the quarter and more than $30 million over the last six months.
It might seem counterintuitive that at a time, when discretionary spending is down and supply chain costs are up, a segment like rental would do well. People typically rent clothing when they’re going out frequently or have events. It’s also a segment where shipping clothes back and forth is one of the biggest expenses.
But other rental services are performing well, too. In June, Rent the Runway exceeded all guidance in its earnings, growing revenue 100% year-over-year. That success has come partially from reforming its subscription model last year, leading to nearly doubled 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 the agreement, all Richemont brands will begin using Farfetch technology to power their e-commerce. Farfetch already does the same for other prominent luxury brands like Chanel and Brunello Cucinelli. Now, as the partial 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 deals to its portfolio.
Victoria’s Secret is taking criticism in stride
Victoria’s Secret hasn’t had the most positive press in the last few months. In addition to the Hulu documentary on the brand that dove 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 the singer Jax called “Victoria’s Secret” castigates the brand’s impact on young women.
But according to Victoria’s Secret CEO Martin Waters, the brand welcomes the attention.
“It keeps us top of mind. And that’s a good thing,” Waters said on a press call on Thursday.
Victoria’s Secret responded openly to the Jax song on Instagram, agreeing with the content of the song and trying to absorb, rather than deflect, the criticism. This aligns with Victoria’s Secret’s overall rebranding efforts to be a more progressive brand.
Its response to the documentary, however, was different.
“It actually had very, very low viewing figures [and] even lower completion of the series,” Waters said. “And the relatively few people who did actually make it all the way through to the end of the series had a stronger perception of the brand coming out of it than going in.”
Coty soars thanks to travel retail
The lipstick effect has never been more literal. In the face of high inflation and rising costs, Coty’s revenue rose 10% in the last quarter, beating analyst estimates and positioning the beauty company for solid and stable growth for the rest of the year.
Estée Lauder and L’Oréal, Coty’s biggest rivals, also had solid quarters.
Coty CEO Sue Nabi attributed the company’s growth to strong sales in e-commerce and travel retail.
“I really hope that everyone will recognize these eight quarters of results on par or ahead of expectations as a great achievement,” Nabi said on an earnings call on Thursday.
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