Around the industry, deals, investments and expansion are changing the fashion landscape.
A.B.S. by Allen Schwartz
Allen B. Schwartz has sold his A.B.S. by Allen Schwartz (ABS) brand to an investment group led by Five Oak Brand Management Advisors for an undisclosed amount.
After Schwartz founded ABS in 1982, the label became an important contemporary line for retailers such as Macy’s, Saks Fifth Avenue and Nordstrom. About a decade later, Schwartz developed a rep for knack for knocking off celebrity-worn designer gowns for the mass market in just a few weeks. The copycat business, which relied on cheaper synthetic fabrics, became a new division called Oscar Watch.
“The brand was the first influencer brand creating designs inspired by pieces worn by top celebrities on the red carpet and making them available in more attainable silhouettes and price points,” according to ABS, which has been worn by Ashley Graham, Brittany Spears, Heidi Klum, Khloe Kardashian, Paris Hilton, Simone Biles, and Tina Fey.
Schwartz was criticized by other designers who hated seeing his low-priced copies of their couture designs. He also stirred the pot with incendiary comments about selling in department stores, taking aim at prices and styling in the channel. His distaste for the sector led to a sales and marketing shift focusing on specialty stores and the direct channel.
“We shipped our last collection to stores in December, and currently have a new collection in development that we hope to launch in-season sometime this Spring,” Schwartz said via e-mail.
He detailed the reasoning behind the decision to sell the label now. “The business has changed and I needed a strong partner who could focus on a global supply chain to stay competitive as well as bring strong licensing deals,” he said.
“Simon Douek and the Five Oak team excel at managing licensing deals, global supply chain management,” Schwartz added, referring the Five Oak CEO. “They also have a great marketing and branding team that understands the current needs of the consumer market. When they dubbed me the ‘original influencer brand’ in a meeting, I knew they understood the core of my brand.”
Look ahead, Schwartz pointed to plans to “grow the brand’s category offerings, through strategic licensing deals as well as the brand’s presence both domestically and globally.”
“This year is the 40th anniversary of the brand so we have big plans to celebrate the milestone,” he added.
The company was sold in 2000 to Warnaco Group Inc., best known for its Calvin Klein jeans and Olga bras, for an estimated $20 million to $30 million. Warnaco subsequently filed for bankruptcy court protection in June 2001. After Warnaco emerged from Chapter 11 in February 2003, it agreed to sell ABS nine months later to Schwartz and Armand Marciano, who with his brothers founded Guess Inc.
Like many fashion brands, ABS has struggled through the Covid pandemic.
Under the terms of the transaction, the private equity firm will manage the brand, working with licensing partners and sourcing manufacturers for its product lines. Schwartz will stay on as creative director.
“We are excited to welcome Allen and the ABS by Allen Schwartz portfolio to the Five Oak family. The acquisition of the ABS by Allen Schwartz brands is a milestone for Five Oak as we are growing our brand portfolio and have been seeking brands with the stature and track record of ABS by Allen Schwartz,” Douek said. “Our years of experience consulting with brands and manufacturers has Five Oak poised to grow the brand’s domestic and global reach while continuing to bring the fashion-savvy consumer a top-quality product with up-to-date styling at attainable price points.
LVMH invests in streetwear standout
Meanwhile, Aimé Leon Dore has caught the eye of LVMH Luxury Ventures (LLV), which took a minority stake in the streetwear brand Teddy Santis founded in 2014.
Santis built the New York label in Queens, inspired by the city and its hip-hop culture across art, sport and music. Aimé Leon Dore’s ready-to-wear seasonal collections include clothing, footwear and accessories. The brand also creates special projects, such as collaborations with New Era and Timberland. It has executed multiple collaborations with sneaker brand New Balance.
“LVMH’s vast network of global leaders across the industry and its rich history in growing exceptional storied brands offers a truly unique partnership opportunity to fuel the next chapter of growth for Aimé Leon Dore,” Santis said in a statement.
The brand will continue to operate independently out of its New York City offices, with guidance from LLV, Aimé Leon Dore said.
In addition to an online presence, the streetwear brand operates a flagship store in Manhattan’s Nolita neighborhood. The location at 214 Mulberry St. also operates Café Leon Dore, where coffee, pastries and other items from Greece nod to Santis’ family roots.
Terms of the transaction, including financial, and plans for the future were not disclosed. The LLV arm was created in 2017 to invest in high-growth early-stage business-to-consumer brands with significant growth potential. It also invests in business-to-business companies that support luxury’s digital transformation, and in the general consumer goods sector.
The LLV website said it targets companies with revenue between 3 million euros ($3.4 million) to 30 million euros ($34.1 million), and makes equity investments between 2 million euros ($2.3 million) to 15 million euros ($17.0 million). Its minority equity stakes range from 5 percent to 25 percent, “mainly through capital increases,” the site said. It counts fashion brand Gabriela Hearst as part of its investment portfolio since January 2019. And LLV has a history in streetwear. In October 2019, the investment arm of LVMH was the lead investor in a $1.5 million seed round in streetwear label Madhappy. The company was an investor in Stadium Goods, which it exited in February 2018.
Earlier this month, LLV—along with venture capital firm Antler—led the $5 million seed round that took a stake in London-based circular startup Heat, which puts unsold luxury items into subscription-based mystery boxes that appear to be a fan favorite among Gen Z.
Given LVMH’s expertise, luxury know-how, and deep industry connections, the French luxury arm is expected to help Aimé Leon Dore expand in the U.S. and internationally. This would help the brand build out its presence and cult following, similar to Supreme International, which VF Corp. acquired in December 2020.
An on-demand apparel producer for brands like Shein and Steve Madden secured a $40 million investment to fund its U.S. expansion.
Hong Kong and New York-based HugePOD recently announced the results of its Series B funding round, which was led by internet services firm Joyy Inc. Previous investors Engage Capital, Source Code Capital and ZhenFund also bought into the manufacturer’s plan to court American brands with its made-to-order apparel and design services.
With corporate offices in Los Angeles, Beijing, Guangzhou and Dubai, HugePod uses intelligent manufacturing tools like image recognition and AI to help both experienced designers and novices create products through its online platform. 3D mockups of garments can be created from anywhere in the world using any computer, tablet or smartphone. HugePOD’s on-demand model enables brands and individuals to order product as needed free of minimum order quantities.
“With this new funding, we will expand our presence in the U.S. to meet the needs of both current and aspiring small and medium sized business owners as well as creative individuals who want to turn their ideas into reality,” HugePod chief marketing officer Ying Dai said in a statement.
The “investment will provide the company with significant resources to help keep costs down for our partners and customers, while also maintaining a high level of quality print-on-demand service so they can efficiently drive profitability,” Dai added.
In light of recent supply chain challenges, HugePod aims to offer U.S. SMBs a quick and cost-efficient way to design, produce and disseminate product, Dai said. To get started, creatives can upload their own designs to the platform, or choose from HugePod’s wholesale section of AI-generated product images. From there, they can personalize garments using a drag-and-drop tool for prints and patterns, and view a 3D mockup before committing to sampling and production, which takes place at the company’s factories in Vietnam and China.
The company’s production relies on intelligent manufacturing processes, like automatic sublimation printing, edge-finding cutting, pieces sorting and process operating, that are facilitated by image recognition technology and AI. According to HugePOD, the automated system cuts the cost of all-over printing by up to 50 percent, compared to other producers.
The factories can customize orders with sustainably produced labels, hangtags and packaging, and customers can receive samples of products before placing more significant orders. Drop-shipping directly to end consumers is also an option, cutting out the need for transportation and warehousing and reducing carbon emissions.
HugePod has integrated manufacturing, order management, quality control and logistics tracking into its Smart SCCP system for enhanced traceability across its network of manufacturers and suppliers. These capabilities have enabled the 11-year-old company to create “strong and flexible” supply chains for brands like Steve Madden, Forever New, Landmark, and fast fashion juggernaut Shein.
GOAT Group has big international expansion plans for 2022.
The luxury and lifestyle sneaker and streetwear site believes expanding its global will “deepen our relationship with our seller community and our buyer community because we currently deliver to 170 countries around the world,” chief operating officer and former chief financial officer Yunah Lee said during a recent presentation at the ICR Virtual Retail Conference.
“Having an intra-region service opportunity is very important to us, which is why our international expansion of our authentication centers and operational warehouses is so critical to our strategy,” she added. The centers allow people to drop off goods, and create greater cost efficiencies on the warehouse management side of the business while helping the company to provide better customer service. “Having a facility in Singapore allows us to get products more quickly into the hands of our Southeast Asian consumers than if we were only here in the U.S.,” she said.
Goat Group’s largely Gen Z and millennial audience now includes 40 percent women, versus the heavily male customer base Eddy Lu and Daishin Sugano served when they launched the company back in 2015 as a sneaker resale platform.
Six years of data and insights informs much of the decision-making on where to expand, Lee said. Asia was a key expansion in 2019 when Goat opened offices in Hong Kong and Shanghai. “We are continuing to focus on the data and what our customers are telling us, which is also why we decided to enter into our apparel and accessories business,” she said.
Last year, the company expanded into Singapore, Japan and Mainland China, quadrupled its in Hong Kong presence, and opened facilities in the U.K. and the Netherlands.
The company raised a $195 million Series F last June, including new investors Park West Asset Management, T. Rowe Price Associates. Inc. and Franklin Templeton, and valuing the company at $3.7 billion. The new funds give Goat more than sufficient capital to “double down on our 2022 strategy,” Lee said, as Asia and Western Europe represent “massive opportunities for us to grow and scale our business.”
Goat’s WeChat mini program in China is unique as the company hasn’t partnered with any other third-party platforms, Lee noted. And looking at global opportunities, Goat “will want to continue to have more localized experience, whether it’s in Europe or in Asia,” she added. “And as we think about the next five years, ultimately what we want to do is to enable our global consumers to gain access to these goods in the most cost effective and timely manner. And we want to make it as simple as possible for both our buyers and our sellers.”
Goat is focusing on its end-to-end customer experience for 4 -million members and 700,000 sellers, Lee said. Technology investments enable the company to deliver augmented reality experiences that mean consumers can “try on” products at home. Goat also continues to focus on minimizing counterfeits, its raison d’etre when it was founded in the sneaker resale world. Lee said Goat has been able to keep fake products away at a “de minimis rate” because of the company’s ability to leverage data science and artificial intelligence and image recognition models.