Retail may be hurting, but fashion seems to be thriving: just ask Victoria Beckham – the luxury empire, not the woman – who just got a $40 million investment from Neo Investment Partners, a firm run by a former Goldman banker. According to the NYT, “after years of speculation that her fast-growing namesake fashion brand was a prime takeover target, it was announced on Monday that Ms. Beckham had received £30 million, or almost $40 million, from the private equity firm Neo Investment Partners in exchange for an undisclosed stake in the business.”
Beckham’s fashion business is controlled by Beckham Brand Holdings, which is jointly owned by the Beckhams and Mr. Fuller. The investment by Neo is expected to give it a valuation of about £100 million.
The former Spice Girl, who was named entrepreneur of the year by Management Today in 2014, said that she had been looking for an investor who understood her perspective on fashion and beauty business models and respected her determination to maintain an independent business. “I started my brand from a small room in Simon Fuller’s office with him and David believing in me and supporting my vision,” she said. “I now have an additional partner who is showing that same belief.”
The Spice Girl turned fashion designer added that the investment would allow her company to expand its retail operations, both online and offline, to push into new product categories and to move its staff into larger headquarters in West London next spring.
Beckham founded her line in 2008 alongside her husband, and the former Spice Girls manager Simon Fuller, and was predictably “thrilled” to have found a partner in Neo. “As my business enters into its second decade of operation, this investment and partnership signals an incredibly exciting new chapter,” Beckham said.
As for her investor, Neo, which was also founded in 2008 and based in London, it has a focus on the European luxury sector, with investments in Ami Paris, a contemporary men’s wear brand, and Valextra, the Italian luxury leather goods brand.
“Victoria Beckham is one of the most exciting entrepreneurs I have the pleasure to work with,” Belhassen said in a statement following news of the deal. “She is an inspiration to millions of women around the world and she has built a unique, differentiated luxury brand with a strong identity and very high potential.”
While Beckham’s business has enjoyed substantial growth in recent years…
Known initially for its chic, sleek dresses with internal corsetry and more recently for collections centered on soft, slouchy tailoring, Victoria Beckham has moved in the past nine years from a single ready-to-wear line into accessories, eyewear and footwear. She has added a second line, Victoria by Victoria Beckham, flagship boutiques in London and Hong Kong, and a series of collaborations with the likes of the mass-market retailer Target and the cosmetics group Estée Lauder.
… the bad news is that despite a prominent fixtures on the New York Fashion Week schedule, strong sales across key geographical regions and considerable critical acclaim, the Victoria Beckham brand continues to be unprofitable and has been bolstered by funding from DB Ventures, the company that deals with Mr. Beckham’s many product endorsements. In 2015 it posted a pretax loss of £4.3 million. It is expected that some of the cash from the Neo investment will go toward paying down accumulated debt. Revenues for the past two years have come in at around £36 million annually, although the company said revenues for the first half of the 2017 financial year “indicate double-digit growth on the year.”
Of course, we live in a world in which the market tends to reward some losses more than profits (as some assume they imply growth) and so will hardly be used against her. To be sure, Beckham and her biggest supporters remained enthusiastic after news of the deal and what it could do for the company’s growth. David Beckham said that he was “so proud” of his wife and that he expected the next decade “to be even more exciting” for her business, a sentiment echoed by Fuller. “2018 promises to be the most exciting year yet, with the 10th anniversary celebrations and move into new premises,” Mr. Fuller said. “This is a hugely positive time for Victoria Beckham. The continued growth and potential has never been so dynamic.”