Farfetch will use their capabilities to create the “brands of the future.”
Alongside strong second-quarter earnings (revenue grew 43%), Farfetch announced a major acquisition on Thursday afternoon: It has purchased 100% of New Guards Group, the Milan-based parent company of Off-White, Heron Preston and Palm Angels in a deal valued at $675 million.
The New Guards Group is known for having developed and elevated the aforementioned brands from their infancies. For Farfetch, this addition adds a new layer to its business model — dubbed “brand platform” in a press release. Farfetch will have the group’s design, production and brand development capabilities. And now, the retailer can leverage its retail network and data about customers, as well as experience powering brands’ e-commerce sites, to ultimately enable what it’s calling the “brands of the future.”
“The brands of the future will have three core elements. First, a creative tastemaker able to leverage digital channels to engage a global community; second, best-in-class design, planning and manufacturing; and third, direct-to-consumer global online distribution, complemented by a connected wholesale presence in the most prestigious physical boutiques,” Farfetch CEO José Neves said in a statement. “This is what the combination of Farfetch and New Guards brings to the industry. Together, we can not only continue to develop New Guards’s current portfolio, but will also be uniquely positioned to bring many new talents to life with the combined layers of the Farfetch platform.”
Farfetch uses Off-White as an example. Currently, Off-White is one of Farfetch’s top 10 brands in terms of Gross Merchandise Value, but it’s only available on the site through Farfetch’s boutique partners; the vast majority of its sales come from wholesale. Farfetch says it will soon introduce and power a new Offwhite.com on the platform, and align Off-White’s inventory with its boutique partners in a model it’s calling “connected wholesale.” Basically, Farfetch plans to match supply and demand in near-real time by leveraging its connections with 650+ retailers, thereby improving sales and profit margins, and lessening the risk of unsold inventory that would need to be discounted.
Farfetch says it plans to do this with all of New Guards Group’s “existing and future” portfolio brands, suggesting that more acquisitions or launches are on the horizon. This news follows last year’s IPO and subsequent acquisition of Stadium Goods.
Update, August 8, 8:30 p.m.: A representative for Off-White reached out to clarify the brand’s ownership structure thusly: “OFF-WHITE LLC, which is controlled by Virgil Abloh, owns the trademark of our brand, and NGG is our exclusive licensee pursuant to a multi-year agreement. The New Guards Group transaction with Farfetch will not affect Off-White™ day to day operations as the New Guards Group team will become part of Farfetch. We look forward to our ongoing work together.”
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Source: Fashionista.com
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