Farfetch the global luxury marketplace announced via press release that it has confirmed the purchase of Milan-based New Guards Group on August 8, acquiring a host of brands alongside the company’s staff. Farfetch purchased 100% of New Guards Group’s shares for $675 million USD,
In purchasing New Guards Group, Farfetch comes under control of some of the most buzzed about streetwear brands, including Off-White, skate culture-inspired Palm Angels and the sporty, genre-bending American label, Heron Preston.
These millennial-driven brands are set to become a key source of revenue for Farfetch going forward, with New Guards Group generating revenues of USD$345 million in the previous fiscal year, with USD$95 million pre-tax profits. In the first half of 2019, the group’s revenues shot up 59 percent year-over-year — evidence, if anything, of the unprecedented rise in popularity of luxury streetwear, a trend fuelled by prior landmark acquisitions such as the Carlyle Group’s 2017 purchase of a stake in Supreme, valuing the latter at US$1 billion.
“The addition of New Guards’ brand platform brings a creative and industrial dimension to our suite of capabilities which, combined with our community of more than 650 boutiques, enables us to power and promote both new and existing creative names in the luxury industry to build the brands of the future,”
Farfetch CEO José Neves said in a statement.
The marketplace said it would pay for New Guards Group in cash and Farfetch shares.
During an interview with Business of Fashion in April, de Giglio said he wanted to build New Guards Group into an Italian fashion conglomerate similar to the French’s LVMH.
“Look at the French: they have big fashion groups. There is not one Italian company like this,” De Giglio explained. “This is something that I see: to be an Italian company capable of building something. Italians have a thousand years of experience in making clothes. It’s in our DNA.”
Farfetch has stated the deal as key to its plan to ‘launch brands of the future’, in acquiring a platform that is well-known for its ability to identify up-and-coming talent and provide a stepping-off platform for highly buzzed-about brands. “[New Guards is] a platform — they are not a brand, they are not a Maison, they are not a conglomerate,” said Farfetch founder and Chief Executive Jose Neves, as reported by BoF. “They are absolutely best in class in terms of spotting the new stars of tomorrow.”
This hints at Farfetch’s ultimate goal, which appears to blend its e-commerce capabilities with New Guards’ management skills. “Farfetch will directly support new creative talent to unlock their vision and potential,” the release continues, explaining that this plan will eventually “enable the ‘Brands of the Future’.”
Of course, that doesn’t mean that Farfetch is ignoring the crown jewels of the New Guards stable. Instead, “Farfetch will help New Guards’ existing and future portfolio brands maximize their potential by opening new e-Concessions on the Farfetch Marketplace, and will power each brand’s own e-Commerce site and digital platforms through its Farfetch Platform Solutions capabilities.”
The company acknowledges that the brands already existed on its marketplace; Off-White is cited as one of Farfetch’s 10 most popular brands.
In response to news of the purchase, Farfetch stock has dropped nearly 40%, falling from 18.25 USD per share to $10.10 USD in just under an hour and 20 minutes.
The post Farfetch Acquires Off-White™ Holding Company for $675 Million USD appeared first on Fadedmix Magazine.
