Fluctuations across the fashion market mean that China is less of a reliable revenue driver for brands than it used to be. Elsewhere, Rhone is trying to reinvent itself by launching womenswear, while Victoria’s Secret is trying to do the same by bringing back its famous show. Don’t forget to subscribe to the Glossy Podcast for interviews with fashion industry leaders, and Week in Review episodes and the Glossy Beauty Podcast for interviews from the beauty industry. –Danny Parisi, sr. fashion reporter
JD’s struggles are the latest sign of China’s slowdown
On the latest Week in Review podcast, I spoke with Glossy’s international reporter, Zofia Zwieglinska, about the demand for luxury goods slowing down in China, which is having an impact on the global luxury market.
Now it seems that even non-luxury brands are struggling with reduced demand from Chinese consumers. Last week, multiple Wall Street brokerages cut their forecasting for the Chinese e-commerce company JD over concerns that it will not be able to meet its revenue goals. Morgan Stanley, in particular, cut JD’s outlook by 40%, saying that it did not have confidence JD could stand up to the slowdown happening across the Chinese market.
JD’s share price has halved over the last year and the rest of the Chinese economy seems to be following suit, according to an analysis from Bloomberg.
Rhone heads into womenswear as activewear remains competitive
While the activewear brand Rhone has made itself known by focusing on the growing menswear space, the brand announced this week that it is fully expanding into womenswear. The new womenswear launch isn’t just a capsule or one-off collection, but instead, it’s a full expansion of the total product catalog to include womenswear.
In previous years, I’d be inclined to say that women’s activewear was the more competitive category. Rhone is now going up against titans like Lululemon and Alo Yoga which take up huge swathes of the women’s market. But in recent years, men’s activewear has grown at an incredible rate. Brands like Vuori have risen from DTC startups to potential IPO candidates with hundreds of millions in funding and billion-dollar valuations.
As the global activewear category as a whole inches toward a $320 billion market size, both men’s- and women’s-focused companies will grow more competitive.
Victoria’s Secret assures investors of its comeback
Speaking of the difficulties of the market, Victoria’s Secret held an investors’ meeting last week in which the company tried to assure investors that it can handle some of the challenges facing it: Its market capitalization is just over $1 billion, far below its sales of $6 billion, and its stock is trading 50% below where it was last year.
CEO Martin Waters said that both the core brand and Pink are not where he wants them to be. But there were some bright sides. The brand’s loyalty program has accrued 18 million users, and it has 85 million followers on Instagram, making Victoria’s Secret one of the most followed brands on the planet. The latter was particularly helpful in promoting the company’s recent fashion show, which it brought back after a long hiatus.
But Victoria’s Secret will have to convince investors that the investment in the show was worth it, in order to get its stock trading higher. But now is a time of investor skittishness, and it will be a hard sell. To read a little more about the struggles publicly traded fashion brands are facing now, see last week’s Glossy Fashion Briefing, which provides a deeper dive.