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A Model Investment – The Business of High Fashion

Tiffanie Darke, Editor-at-Large of The Sunday Times Style magazine, on the prizes and pitfalls of investing in designers and luxury brands.

Britain may be a tiny island but when it comes to fashion, it turns everyone’s heads. The UK fashion industry employs nearly 800,000 people and contributes some £26 billion to its economy each year, and the brands are some of the best known worldwide. No self-respecting stylista is without a Burberry mac, a Mulberry handbag or a pair of Jimmy Choos.

Beyond the brands, British creative talent is sought after the world over. Yorkshireman Stuart Vevers has been making waves as executive creative director at American luxury brand Coach since 2013, while in France, Londoner Phoebe Philo has single-handedly resurrected Céline as one of the world’s most desirable and Birmingham’s Claire Waight Keller is powering up Chloé as its creative director. And so successful were the cool Brit duo Luella Bartley and Kate Hillier at the helm of Marc by Marc Jacobs, they are now busy establishing their own label, HillierBartley.

The result? Big luxury fashion conglomerates are swooping on London. In 2013, LVMH took a stake in young designer JW Anderson’s eponymous label and hired him to become creative director of Spanish heritage label Loewe, then followed that up with a controlling stake in British footwear label Nicholas Kirkwood. Not to be outdone, Kering purchased a 51 per cent stake in Scottish designer Christopher Kane.

Having the backing of such powerful businesses has resulted in supercharged sales for these labels. Following its purchase of Christopher Kane, a spokesman at Kering said; “The increased brand awareness has resulted in strong growth and Christopher Kane’s collections are now distributed in over 30 countries.”

For Britain’s rising fashion stars, the benefits of investment are obvious. The costs of creating a collection and showing at London Fashion Week are huge and have to be coughed up long before they hear the tills ringing. Emerging talent can get support from schemes such as the British Fashion Council’s NEWGEN and Fashion Trust, which help to cover the cost of shows and offer mentorship.

Getting a fashion brand off the ground takes at least 10 years, but your return is to be part of a creative industry capturing imaginations the world over

“I use a lot of handmade fabrics and I wouldn’t have been able to fully explore those without financial help,” says new London Fashion Week entrant Samuel Dougal, whose tailoring has caught the attention of investor Kelly Hoppen.

“I invested in Samuel because I love fashion and I believe in him. I know I can bring value to the organisation of his business and leave him to what he knows best,” says Hoppen.

It’s not always plain sailing, however. The closure of the lauded Jonathan Saunders label in 2015 shocked the fashion community, coming less than a year after investor Eiesha Bharti Pasricha took a stake in the business.

“Saunders is a really talented guy, fashion loves him, but he’s gone bust. Fashion is a good investment if you are prepared for how much you are going to have to drum up,” warns private equity advisor Colin Henry, a former boss of venerable UK label Jaeger. “There is a risk profile that is very different to many other industries. There are peaks and troughs that require patience. If you have a relatively short time frame, do not invest in fashion.”

With high risks and hard-to-predict variables, (not least the weather – this winter has been atrocious for knit sales), investing in the fashion industry should be approached with caution. So what is in it for the investor and what should they be looking for?

“There are very few industries where you can go from zero to hero and make such a difference as you can with fashion,” says Henry. “It comes down to the innovation and inspiration of an individual and their idea and then consumers then grabbing on to it. In terms of social media, the brand has to have a decent following – you can learn a lot from brands by seeing what other people think about them. If they’re not being blogged about or written about, that should be a warning sign. Reputation has never been more important because everything happens digitally and happens instantly.”

A brand can get a head start on its rivals by cultivating a loyal following before collections hit catwalks. In 2015, Emilia Wickstead sold a 21.3 per cent stake in her eponymous label for a reported £1.57m, valuing the business at £5.8m. She had been showing at London Fashion Week since 2012 but had been growing a fan base since she launched the label in 2008.

“I started to build up a client base when I was still at university through a mixture of family, friends and word of mouth, and eventually women came to love my different silhouettes and would come to my living room to see the collection and make their orders,” says Wickstead. “These women still shop with me today, they are the heart and soul of the business.”

Investing in fashion requires commitment and forethought. According to Colin Henry, getting a fashion brand off the ground takes at least ten years – so there’s no quick buck to be made. But what you get in return is part of a hugely creative industry that captures imaginations the world over – and instils the kind of passion that never goes out of style.

With so many exciting young labels entering the showrooms of London Fashion Week this year, it’s hard to know where to focus to find tomorrow’s big brands. Here are my tips for the ones to watch:

Self Portrait
Does London fashion brand Self Portrait really sell a dress every ten minutes in Selfridges? You better believe it. This fast-growing frock line has successfully honed in on that special price sweet spot. For around £400 you get a girl-friendly dress with a seriously contemporary edge.

Regina Pyo
Regina Pyo is about to hit the big time. The young start-up’s theory is simple: focus on what you do best – that’s seriously stylish frocks for the working woman. Brilliant use of colour too that sets them apart from the crowd.

Preen
Design duo Preen have been showing on the New York and London catwalks for years but it’s not until now that they’ve really caught on with the shiny set. It’s this kind of experience, plus an established brand, that makes them a real investment opportunity.

Mansur Gavriel
Just ask Kirsten Dunst and Miranda Kerr about the buzz surrounding new cult bag brand Mansur Gavriel. This LA-based duo grew through word of mouth amongst in-the-know bloggers and social media mavericks.

Tiffanie Darke is Editor-at-Large of Sunday Times Style and Creative Content Director of The Times, The Sunday Times and The Sun.