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UK's five most promising fashion companies

Publication Date: 10 Oct 2019 - By Manika Premsingh By Manika Premsingh
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Thematic Equity USA UK Consumer

When it comes to fashion in 2019, particularly luxury fashion, technology is the name of the game. A number of companies have mushroomed in recent years that use increasingly newer technologies to give customers a convenient and personalised shopping experience at their fingertips.

However, with these changes in the market some businesses - and areas of the fashion world - have been much faster to adapt than others. “The largest luxury groups have been slow to adopt online developments and they are now in catch-up mode, trying to identify the most promising technologies and business models,” says Bruno-Roland Berrand who’s strategic and communications consultancy BRB & Cie is advising several luxury players. “They mix direct investments in existing outfits and development of their own digital factories.”

“The original resistance was mostly a generational issue but the success of the pioneers e.g. Net-à-Porter and Yoox and a progressive change in guard in the controlling shareholders' families have triggered a radical shift: luxury conglomerates haven been looking into digital distribution for three to four years and are starting to consider opportunities in relation to the forthcoming technological revolutions with AI and human-machine interfaces on top of mind,” Berrand says.

From e-commerce websites to purely chat-based applications and AI-driven styling inputs, online companies are innovating for fashion like never before for a share of the growing luxury and apparel market. They might be at various stages of maturity but all these five companies are either coming into or already have a niche of their own.

We explore some below:

#1. Lyst: The fashion aggregator boasts of bringing together over 5 million products from over 12,000 online fashion stores to allow ease of e-shopping for the customer. The company was founded in 2010 by Chris Morton and Seb Trepca and witnessed 70m shoppers from 120 countries searching on the platform last year. According to company database Crunchbase, it has raised $60.5m so far, including raising capital from Facebook and Spotify investor Accel Partners along with 14W and Balderton Capital among others. One of the recent investors of this London based company is LMVH, of leading luxury brand Louis Vuitton (MC.PA), which is looking to improve its online visibility. Lyst has had six fund raising rounds so far and is estimated to have a $22.8m revenue. It now wants to expand geographically, especially in Europe and Asia with 60% of its present revenues from the US.

#2. Threads Styling: Another company where technology meets fashion, Threads Styling is one step ahead in that it is entirely e-chat based. It provides luxury styling service and has been on the Sunday Times Tech Track 100 list of fastest growing technology companies in the UK. Founded in 2009 by Sophie Hill, the London-based company has customers in 100 countries and Asia is among its fast growing markets. It sources products from high-end brands like Dior, Fendi and Chopard among others to for its shoppers, who on average spend $3,000 per session. It has raised over $20m in funding so far, with Highland Europe and Talis Capital as its investors. Tech website Crunchbase estimate Threads Styling’s revenue is at $11.4m, and to its credit is the fact that it holds no inventory, but works on a commission per sale. It is now planning to open an office in California. 

#3. Farfetch: The oldest and the most established on this list, online luxury marketplace, Farfetch (NYSE: FTCH) was founded in 2007 in London and debuted on the New York Stock Exchange in 2018, proof of the potential that exists in the rapidly growing luxury fashion segment. It reported revenues of $602m in 2018, an impressive 56% increase from the previous year. While the company shows a gross profit, it did show an operating loss. Analysts are still bullish on the stock, however, given the opportunity in the space and Farfetch’s leadership position therein. It has customers in 190 countries, the website is available in 15 different languages and the platform offers a selection from 3000 brands covering jewellery, apparel and accessories. Founded by Jose Neves, the company today employs in the range of 1000-5000 people, though the exact figure was not known. It has acquired six companies, with the Milan-based New Guards Group, being the most recent one in August this year for $675m.

Farfetch is also of particular interest, says Berrand, due to its problems. "Farfetch’s stellar growth comes at a cost and worries on the cash drain, compounded with the recent strategic acquisition of a bricks-and-mortar business, have led to a recent rerating of the stock. Farfetch’s market capitalisation has been divided by four from its peak and its next strategic moves will prove decisive for its future," he warns.

#4. Unmade: The London-based company describes itself as a ‘global fashion software company’, which allows customers to participate in the process of creating their own unique knitwear product, within a set of pre-existing parameters. Started up in 2014 by three founders - Hal Watts, Kirsty Emery and Ben Alun-Jones, Unmade offers customers a price advantage and short turn-around time. To its credit is the fact that it has been on American business magazine, Fast company’s, list of 50 most innovative companies. In July this year, it announced funding to the tune of £4.8m, with Octopus Ventures as the lead investor along with MMC Ventures, Felix Capital and existing investors. This increased the total capital raised by Unmade to £13.2m. In its fund-raise press release, it says that it now works with three of America’s top-10 fashion brands. The company aims to expand globally and improve customer engagement as well as work on its technology.

#5. Intelistyle: London-based Intelistyle is a newbie, launched only two years ago, that combines artificial intelligence with customers’ tastes and body type. So far, it has raised $770k in two rounds of funding, the latest from Metavallon VC. It received an initial grant from Innovate UK, the UK government’s innovation agency. Co-founded by Kostas Koukoravas and Michael Michelis, the company has partnered with a number of leading retailers including Next (LON: NXT), Mango and H&M (STO: HM-B) to allow customers to make choices that could be far more on point than personal shoppers. The team is spread across the UK, US and eastern Europe and it is now looking to grow in international markets.

Disclosure:

I have no positions in any of the securities referenced in the contribution

I do not use any non-public, material information in this contribution

To the best of my knowledge, the views expressed in this contribution comply with UK law

I agree with the terms and conditions of ReachX

This contribution is for informational purpose and does not constitute investment advice nor is it an offer to sell or buy, nor is it a recommendation for any security.

Manika Premsingh

 

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