Over the course of five quick years, the Marc Jacobs brand unraveled.
Today, Marc Jacobs’ retail revenue has decreased to $300 million, about half of what it was three years ago. The brand has been undergoing continuous restructuring and repositioning, per LVMH, as sales have been flat or declining ever since the contemporary diffusion line Marc by Marc Jacobs got the ax in 2015. According to industry analysts, that line accounted for as much as 80 percent of the brand’s retail revenue.
Personnel changes have also rattled the brand: Co-founder and president Robert Duffy departed in 2015, while CEO Sebastian Suhl was replaced by former Kenzo CEO Eric Marechalle in 2017. In February, Marechalle appointed Baja East designer John Targon to lead the direction of a new lower-priced Marc Jacobs collection, with Targon installing a new team of designers from scratch. WWD reported on Wednesday that Targon has left the company, a mere two months later.
During the course of the turbulence, owner LVMH has maintained that it’s still invested in the future of Marc Jacobs and has denied any speculation that it would sell off the brand. But it’s proving more complicated than executives appear to have thought, and in 2017, LVMH CEO Bernard Arnault memorably said that he was more concerned about Marc Jacobs than President Trump.
“Marc Jacobs missed a great opportunity to be a relevant accessible brand, in the same vein as Michael Kors,” said Luca Solca, the head of luxury goods at Exane BNP Paribas. “Instead, the brand moved upmarket, and even killed the Marc by Marc Jacobs line, which I think was a mistake.”
At one point, LVMH had Michael Kors-level hopes for Marc Jacobs. The designer’s 2013 departure from Louis Vuitton, where he had served as creative director for 16 years, was supposed to be a godsend for his namesake brand, where he would rejoin business partner Duffy. LVMH CFO Jean-Jacques Guiony told investors in October of 2013 that the company was prepping the brand for “tremendous growth” in light of Jacobs’ full-time return, riding the momentum of the surging contemporary luxury market. By 2014, Guiony began referencing a forthcoming IPO for the Marc Jacobs brand, which then saw $1 billion in revenue, according to the company.
“We promised Marc Jacobs, and the future managers of Marc Jacobs, to have an IPO,” Guiony said during a call with investors in January of 2014. “We look at what Michael Kors did, and today, Michael Kors — much to everyone’s surprise — is worth $15 billion on the stock market. If we can do something along those lines, or even half that, I’m sure everyone will be happy. It’s an objective. I’m not saying we will get there; we will see.”
Not only did an IPO never come to fruition, but today, the Marc Jacobs brand is struggling to survive. Retail stores have been shuttered amid the reshuffling, and, according to one buyer at a luxury department store, wholesale buys of brand collections have lost drastic value in the confusion.
“The wholesale business, which is the back of the business, is still going down,” Guiony told investors in July of last year. “We are dependent on department stores, particularly in the U.S., for the recovery of the business, and the situation remains quite difficult.”
Of course, it’s a bad time to be dependent on department stores. Right now, the brand is being sustained mainly by a Coty licensing deal for Marc Jacobs perfumes and outlet sales, according to the buyer.
“When Marc by Marc Jacobs disappeared, there was a lack of tiering. With a lack of tiering, there comes less distribution. The brand essentially cut itself off at the legs,” said Rony Zeidan, the CEO of luxury agency RO NY.
That’s where Targon was meant to regain ground. While the details of the line he was in charge of were never shared, it was understood to be a lower-priced contemporary collection that would live alongside the main Marc Jacobs ready-to-wear collection — a reincarnation of sorts of Marc by Marc Jacobs. That line was cut during a time of unification at luxury brands: The lower-priced diffusion line lost its luster amid the rise of fast fashion, the fall of department store foot traffic and general customer distraction.
“Killing Marc by Marc Jacobs was a cost-cutting exercise to reduce all the extra marketing spend and the number of stores necessary to have the brand under one unified concept. It was a mistake, as Marc By Marc was a good gateway to the brand for younger consumers,” said Tony King, the president of the agency King and Partners, which worked with Marc Jacobs from 2004 to 2010. “And one of the main reasons the brand was so successful was the equilibrium created by Robert Duffy. When Robert stepped down, it caused lots of problems around how to position each part of the brand.”
Meanwhile, other contemporary brands, like Milly, Rebecca Minkoff and Mara Hoffman, have seen success by teasing out millennial-driven lines and direct-to-consumer plays — but Targon’s swift exit means the brand’s efforts there have landed back at square one.
“If the brand went back to the mid-price segment, I think it could have a chance,” said Solca. “In the high-end, I don’t think the world necessarily needs Marc Jacobs so much.”