This week, we take a look at P180, the apparel investment company that just took a minority stake in Altuzarra, and its mission to help luxury and apparel brands reach elusive profits.
Brendan Hoffman, former CEO of Vince, and Christine Hunsicker, founder of the rental and e-commerce platform Caastle, created the apparel investment and retail company P180 with a simple, but lofty, goal: help apparel brands reach profitability.
P180 is pitched as both a general investment company and as a way to connect brands and retailers with Caastle. Its first venture was investing in luxury retailer Elyse Walker in May followed by the announcement of its first brand investment in Altuzarra this week.
P180 announced a minority stake investment in Altuzarra on Tuesday, taking over management of Altuzarra’s e-commerce business which has moved to Caastle and adding the option for renting Altuzarra’s clothes and accessories.
Joseph Altuzarra told Glossy that he knew DTC and e-commerce were an important part of the business, but with a small team, there was a limit to the amount of growth Atluzarra could drive without outside help.
“I see P180 as an accelerant to our growth,” he said. “We just didn’t have the expertise in DTC and e-commerce and I knew there was a cap to our growth because of that.”
Part of P180’s pitch to brands is a focus on profitability, something that investors in the fashion industry are placing a much heavier emphasis on now than in years prior due to higher interest rates. But profitability is a difficult prospect for many brands to reach, even for a relatively high-margin sector like luxury fashion.
P180’s solution is to increase the monetization of every piece of clothing through an emphasis on rental.
“The metrics we used for decades to measure success in retail are changing,” Hoffman said. “Frictionless instant price comparison [on a smartphone] wasn’t a thing 15 years ago. If something is marked down somewhere, it’s marked down everywhere. One of our main goals is to gain back margin and increasing the monetizable lifespan of a product through rental is one way we do that.”
Jessica Dvorett, global head of growth at Caastle, said rental has lots of knock-on effects that can help push profitability, even beyond the revenue generated by renting. For one, luxury brands often find their core styles that don’t change season to season to be their best sellers, while trend-driven products may or may not hit in a given season. But with rental, customers are more comfortable taking risks on trendier clothing since they are only paying to wear it a few times.
“Rental is just one part of it,” she said. “Rental supports all the other channels. By offering rental, you can hold on marking down product for longer. It lets you take risks creatively. It introduces people to the brand for the first time. And we find that when brands promote rental, it drives sales to their e-commerce channels, as well.”
P180’s entry into the market comes at a time when even major luxury brands are struggling with their profit margins. Burberry announced in May that its profits had sunk by 40%, for example. LVMH’s profits have fallen by 8%, and rival Kering’s profits fell by 50%. As the luxury industry experiences an ongoing downturn fueled by a contracting Chinese market and higher interest rates in the U.S. that eat into margins, companies like P180 with their focus on profit-seeking will continue to be valuable.
Over the next two years, Hoffman is planning to add more brands to P180’s portfolio, focusing specifically on apparel mono-brands as opposed to retailers like Elyse Walker.
“The brands we’re looking at are Joseph [Altuzarra’s] peers,” Hoffman said. “They’re brands with growth potential — the kind who would be sold at places like Neiman Marcus. We had interest from brands wanting to work with us before this partnership with Altuzarra was announced, and we’re getting a lot more now.”
Stat of the week
12.7%. That’s how much Brunello Cucinelli’s revenues rose in its earnings report on Thursday. Cucinelli is one of the few luxury brands to report positive earnings in the last month, while large luxury conglomerates like LVMH and Kering, independent brands like Burberry, and entire sectors like the Swiss watch industry all reported declining sales.
CEO Brunello Cucinelli attributed the growth to the brand’s focus on its high-end clients and most loyal customers.
“The outstanding results from the first 9 months of the year [are due to] the excellent sales of the fall-winter 2024 collections, and that this is just the beginning of these collections,” he said on the call. “We need to see whether people like them or not, and if people don’t like them, there’s not much we can do at this stage. But people are appreciating them a lot. This and our ongoing commitment to garments of the highest craftsmanship allow us to confidently maintain our revenue growth forecast of approximately 10% for 2024.”
Other luxury news to know
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Alberta Ferretti appoints Lorenzo Serafini as new creative director
