A drop in the value of the euro, which slid below $1 for the first time in two decades in July, could prompt a new round of luxury-level price increases in Europe. Chanel, for one, is rectifying the price differential between markets – namely, the U.S. and Europe – for its coveted (and increasingly expensive) flap bags by sending price tags up by almost 10 percent in the EU this month. Prior to boosting prices, PurseBlog reported that Chanel’s Large Classic Flap, for example, was selling for $10,165 (including tax) in the U.S., whereas the same bag retailed for €7,832 ($7,952) in Europe, and American travelers were, in fact, taking advantage of the price differences and buying up luxury goods in the EU during their summer travels. 

In addition to raising the prices of its bags, such as the Small Classic Flap, which went from €7,750 to €8,450, the Medium Classic Flap (up from €8,250 to €8,990), and the Jumbo Classic Flap (now €9,700, up from €8,900), Chanel is also reportedly expected to raise prices for some goods across its fashion and leather goods division by roughly 5 percent. (TFL sources say that while handbag prices are rising in Europe, Chanel may actually cut Cruise collection footwear prices in the U.S. to help address pricing disparity given the rate at which American clients are holding off on shopping in the U.S. in favor of Europe.) The handbag price hikes come on the heels of Chanel chief financial officer Philippe Blondiaux revealing in May that the company “could implement” a price increase during the summer “to account for currency fluctuations and inflation,” and ultimately, reduce the price gap between different regions.

Chanel’s rising price tags follow from a string of increases in 2021 and early this year, with the famed fashion house raising prices three times in 2021 and in March 2022, “meaning some of its signature handbags now cost up to twice what they did before the pandemic in 2019,” per Reuters. While many major luxury brands “have raised prices throughout the coronavirus emergency to protect margins and, more recently, to counter rising costs of transport, logistics and raw materials,” Chanel has been “more aggressive than rivals in a move that analysts say also aims to increase the exclusivity of the brand.” 

Reflecting on the March 2022 boost in prices, which took effect in Europe, South Korea, the United Kingdom, Taiwan, Hong Kong, Australia, and Canada, a rep for Chanel stated that it was “not a price increase, but a harmonization of the prices of our entire in-store offer, a principle we have been applying since 2015 and which aims to avoid excessive price disparities between the markets where we are present.” At the same time, the brand’s President of Fashion Bruno Pavlovsky said that the “objective is to offer the same price everywhere to limit the parallel market, [which is] an important signal to our customers, because it is a way of engaging with them in an honest way.”

The latest price hike from Chanel is striking, as “in the past, the focus has always been Europe/China given the implied threat from the Common Prosperity narrative,” (and given that China is one of the largest markets where European luxury goods are sold, along with the U.S.), Jefferies analysts Flavio Cereda and Kathryn Parker said in a recent note. They assert that the results of a comparison of prices for certain luxury goods in Europe versus the U.S. are “quite revealing,” stating that if a U.S. resident were to buy a certain “iconic popular bag from the largest leather goods brand” (read: Louis Vuitton) versus buying the same bag in a Paris store, they would pay “an excess of 60 percent.” 

Against this background, Cereda and Parker anticipate that “momentum [in the EU market] will stay healthy in Q3,” while the “gradual sequential deceleration” in performance that is underway in the U.S. is “set to continue.” 

LVMH management echoed this sentiment in the group’s first-half earnings call late last month, claiming that while the U.S./EU price differences “create some activity with U.S. clients in Europe,” they do not have plans to take any “urgent action” regarding prices, and instead, are in a “wait-and-see” mode. Prada management expressed similar thoughts in a call with analysts in late July, saying that they are waiting to determine what to do in terms of price increases for the second half of the year. “They are not in any rush to change the price gaps across regions, but are closely mentoring it,” according to Bernstein analyst Luca Sola, who said that the Italian brand – which raised prices for all leather goods during the first half of 2022 – bases its pricing strategy on “local market demand and conditions rather than focusing on price gaps across regions.” 

Finally, Hermès may be looking to boost prices, with Bernstein’s analysts stating in a note last month on the heels of the Birkin bag-maker reporting its H1 results that management “looks at price increases from the lens of inflation, the cost of raw materials, and wages,” noting that the French luxury stalwart hired over 800 people and increased wages twice this year and awarded bonuses to employees. However, the analysts caution that it is not “frequent for Hermès to increase prices globally; it is always targeted, [and the company] does not increase prices without a good reason.”

One thing that is also clear: Hermès – and luxury brands more generally – “almost never cut prices” for their in-demand leather goods, and so, if they want to address price differentials between markets, that will usually come by way of an increase in relevant markets and not a decrease in others.

A growing number of M&A deals and investment rounds are bringing together some of the biggest names in the fashion and luxury space. In November, a $1.15 billion deal came to light, bringing together Cartier’s parent company Richemont, Chinese e-commerce titan Alibaba, and fashion retail platform Farfetch. The headline-making transaction followed from reports that a “mega deal” was in the making. In addition to proving noteworthy because it brought together three very big names in the fashion sphere in furtherance of an effort that largely focuses on “providing luxury brands with enhanced access to the China market,” the alliance is striking, as it has given rise to speculation about a potential consolidation, with at least some analysts wondering aloud whether the $1.15 billion tie-up could be “a preamble” a larger M&A effort, namely, Richemont merging Yoox Net-a-Porter with Farfetch or the Swiss conglomerate selling the fashion e-commerce pioneer to Alibaba. 

Around the same time, LVMH Moët Hennessy Louis Vuitton decided to make good on an acquisition effort of its own, the one it had also been quietly (and then not so quietly) working towards: Tiffany & Co. Just a matter of days before the Farfetch-Alibaba-YNAP deal was confirmed, LVMH and Tiffany revealed that they had managed to put their rival lawsuits to bed and come to agreeable terms under which the famed New York-based jewelry stalwart could be brought under the ownership umbrella of the Paris-based luxury goods titan. In exchange for $15.8 billion, LVMH would acquire all shares in the formerly publicly-traded Tiffany & Co.

Both instances come as consolidation has been top of mind in the luxury space, where the biggest groups, such as Louis Vuitton-owner LVMH and Gucci’s parent company Kering, have amassed sizable rosters of brands over the past several decades by way of various fashion and luxury-centric M&A transactions, thereby, enabling them to benefit from sheer size and scale, while making it more difficult for independently-owned brands to compete. The havoc wreaked on brands’ balance sheets by the COVID-19 pandemic and the resulting shift online (and the expenses that come with doing that and doing it well) is expected to accelerate that existing fashion industry M&A activity even further. 

“With the financial difficulties [brought about by COVID] in mind, many players, and in particular the smallest, will become more-affordable M&A targets,” according to Isabelle Chaboud, an Associate Professor in the Finance, Accounting and Law Department of Grenoble Ecole de Management. “The most financially solid players – such as LVMH, Kering or Chanel – will no doubt have the option of buying out competitors, subcontractors and even suppliers.”

A Timeline of Transactions

With the foregoing in mind, here is a running timeline of the most recent fashion and luxury-focused M&A and investments dating back to LVMH’s headline-making deal with Tiffany & Co. … 

Aug. 16, 2022 – Authentic Brands Snaps Up Ted Baker

Authentic Brands Group has agreed to buy British fashion company Ted Baker in a deal that is worth approximately 211 million pounds ($254 million). “Pandemic-related losses forced Ted Baker to put itself up for sale in April,” Reuters reports, with a rep for New York-based Authentic Brands stating on Tuesday that it “believes there are significant growth opportunities for the Ted Baker brand in North America given (its) … strong consumer recognition in this market.” Authentic Brands has built up its portfolio of companies significantly over the past several years, with Barneys, David Beckham, Forever 21, Juicy Couture, Vision Street Wear, Brooks Brothers, and Aeropostale, among others, falling under its ownership umbrella.

August 8, 2022 – Sequoia Capital China Acquires Majority Stake in Holzweiler

Sequoia Capital China has acquired a majority stake in Holzweiler to help accelerate the Norwegian fashion and lifestyle brand’s global expansion. The 10-year-old company, which was founded by siblings Andreas and Susanne Holzweiler, said in a statement, as reported by BoF that the strategic partnership with Sequoia Capital China will accelerate its direct-to-consumer business internationally, including the United States, United Kingdom, China. It expects consolidated turnover to amount to $50 million in 2022, up 60 percent year-over-year.

June 13, 2022 – Zalando Acquires Highsnobiety

Berlin-based e-commerce platform Zalando has acquired a majority stake in Highsnobiety, the global pioneer of the new luxury culture, in furtherance of an effort that will see the two companies “join forces to lead the way in engaging and inspiring customers.” While continuing “independent operations,” Zalando says that Highsnobiety “will act as a strategic and creative consultant helping [it] develop new inspiration-focused spaces and formats on its platform.” The terms of the deal have not been disclosed, aside from the parties confirming that Highsnobiety founder and CEO David Fischer will retain a minority stake in the business.

Prior to the deal, Highsnobiety had raised $8.5 million from investors, including Felix Capital, Torch Capital, Reimann Investors, CASSIUS Family, and Holt Renfrew President and CEO Sebastian Picardo, since its founding in 2005, according to Crunchbase.

June 8, 2022 – H&M Group and Lululemon Lead Investment in Climate Fund

H&M Group and Lululemon are among the leading investors in a Fashion Climate Fund spearheaded by nonprofit Apparel Impact Institute. The $250 million fund aims to “support new programs and solutions with a structured pipeline for getting from pilot to scale,” Apparel Impact Institute stated in a release. “We believe it provides a powerful mechanism to overcome the challenges of getting new solutions implemented by the industry, and thereby accelerate the progress on climate action.”

According to Axois, the fund has “attracted $40 million from H&M Group and Lululemon, plus the H&M Foundation and the Schmidt Family Foundation,” noting that further lead partners are expected to each invest a minimum of $10 million over the next eight years.

June 2, 2022 – Pinterest Acquires The Yes

Pinterest will acquire AI-powered shopping platform The Yes. The deal, the terms of which have not been disclosed comes as the San Francisco-based image sharing and social media service looks to double-down on the shopping aspect of its platform. In furtherance of its mission to “learn what you like and get smarter as you shop,” The Yes, which was founded in 2018 by former Stitch Fix COO Julie Bornstein and Amit Aggarwal, maintains “an extensive fashion taxonomy that uses human expertise and machine learning to power a comprehensive algorithm in fashion.”

“THE YES team are experts in building an end-to-end shopping experience. They share our vision of making it simple to find the right products that are personalized for you based on your taste and style,” Pinterest co-founder and CEO Ben Silbermann said, noting that in the months following the closing of the transaction, “Pinterest plans to sunset the THE YES app and website to allow the merged teams to focus on technology integration and evolving our shopping vision.”

May 17, 2022 – B2B Fashion Supply Chain Marketplace Fashinza Raises $100M

Fashinza has raised $100 million in a Series B round that co-led by Prosus Ventures and Westbridge with participation from Accel, and Elevation, among others, valuing the B2B fashion marketplace at $300 billion valuation. The Delhi, India-based company describes itself as the “fastest apparel manufacturing platform” that “solves apparel/fashion supply chain challenges by connecting fashion brands to experienced manufacturers.”

The round brings Fashinza’s total funds raised to $135 million, which CEO Pawan Gupta says the company will use to “refine the company’s supply chain technology and expand into new markets, including raw materials procurement.”

May 4, 2022 – Kering Invests in Alternative Leather Startup VitroLabs

Gucci-owner Kering is one of the investors in a $46 million Series A round raised by VitroLabs, along with actor Leonardo DiCaprio, agriculture-focused VC Agronomics, Bestseller’s Invest FWD innovation arm, Khosla Ventures, New Agrarian, and Regeneration VC, among others. California-based VitroLabs, which makes cellular-cultivated leather that “replicates the structure of animal hides,” will use the funding to scale-up its operations and expects to start pilot manufacturing this spring.

“At Kering, a chapter/pillar of our sustainability roadmap is dedicated to sustainable innovation and actively looking for alternative materials that can reduce our environmental impact over the long term is part of the solutions we have been exploring for years. We believe that innovation is key to addressing the sustainability challenges that the luxury industry is facing, which is why we are very interested in the potential of biomaterials such as cultivated leather,” Marie-Claire Daveu, Chief Sustainability and Institutional Affairs Officer at Kering, said in connection with the finding announcement.

May 2, 2022 – G-III to Acquire Remaining 81 Percent Stake in Karl Lagerfeld Label

DKNY and Sonia Rykiel-owner G-III Apparel Group will acquire the outstanding 81 percent stake in the late Karl Lagerfeld’s eponymous label for $210 million in cash in a deal that will make it the sole owner of the brand. G-III, which first acquired a 19 percent stake in the brand in 2016 after launching a joint venture in 2015, says that it expects that retail sales for the Karl Lagerfeld label could eventually surpass $2 billion.

Apr. 20, 2022 – Destree Raises Series A from Beyonce, Rihanna, Sequoia Capital China

Destree, the Paris-based fashion brand founded by Géraldine Guyot and Laetitia Lumbroso, announced a Series A round that includes big-name investors, such as venture capital firm Sequoia Capital China, Beyoncé, Rihanna, Reese Witherspoon, Gisele Bündchen, Gabriela Hearst, Carmen Busquets, Jessica Alba, Glossier founder Emily Weiss, and Amy Griffin of G9 Ventures. Financial terms were not disclosed, per WWD, but it is understood Guyot and Lumbroso retain majority control of the business, founded in 2016. WWD reports that the funding will be used to “almost double the size of their small team; open Destree’s first freestanding stores; expand into new or underdeveloped markets like the Middle East, China, Japan and the U.S., and supercharge e-commerce operations and digital-native marketing.”

Apr. 5, 2022 – Farfetch Takes Stake in Neiman Marcus Group

Farfetch announced that it will make “a minority common equity investment of up to $200 million” in Neiman Marcus Group in furtherance of a global strategic partnership.” According to a statement from the two retailers, “The partnership builds on Farfetch’s Luxury New Retail vision and advances Neiman Marcus Groups’ pioneering strategy to revolutionize integrated luxury retail, with an initial focus on re-platforming the Bergdorf Goodman website and mobile application to expand its global capabilities and services.” Neiman Marcus says that it will use the proceeds to “further accelerate growth and innovation through investments in technology and digital capabilities.”

In a note about the deal, Bernstein analyst Luca Solca stated that it provides Farfetch “a strategic opportunity to stand out among service providers and to benefit from the strength of the local US customers,” namely by way of its and its Luxury New Retail and Farfetch Platform Solutions, its suite of commerce solutions and retail technology for luxury brands and retailers.

Mar. 14, 2022 – Kering to Bolster Eyewear Unit with Maui Jim

Kering Eyewear has signed an agreement to acquire Maui Jim, Inc., the French luxury goods conglomerate revealed without disclosing the terms of the deal. On the heels of Kering snapping up Danish eyewear brand LINDBERG in July 2021, the group says that “this second key acquisition is also a major step for Kering Eyewear, which has now become unparalleled in its market segment, further validating the strategy that laid behind its creation by Kering in 2014.” The transaction is subject to the clearance by the relevant competition authorities and is expected to be completed in the second half of 2022.

Jan. 28, 2022 – Farfetch to Acquire Violet Grey

Farfetch will acquire beauty brand Violet Grey for an undisclosed sum, the e-commerce platform announced. In a nod to larger implications of the deal, Violet Grey founder Cassandra Grey will act as chairwoman for the brand, while also becoming Farfetch’s global beauty advisor and the co-founder of NGG Beauty, a division of Farfetch’s New Guards Group, with both entities seemingly ramping up their intentions to launch into the beauty space. The launch of a beauty category on the Farfetch marketplace is scheduled for later in the year.

“Farfetch has a really strong track record for acquiring really special, founder-led brands and celebrating and protecting that kind of brand equity,” Grey said in statement inn connection with the confirmation of the deal.

Jan. 27, 2022 – Kim Kardashian’s SKIMS Raises $240 Million

Kim Kardashian’s shapewear label SKIMS raised $240 million in an unknown-series round that was led by hedge fund Lone Pine Capital and that also included D1 Capital Partners, along with existing investors Thrive Capital, Natalie Massenet’s Imaginary Ventures, and Alliance Consumer Growth. The round doubles the barely three-year-old brand at $3.2 billion, up from $1.6 billion in April 2021. Kardashian and SKIMS CEO Jens Grede will retain a controlling stake in the company after the investment, according to Bloomberg.

Jan. 18, 2022 – LVMH Luxury Ventures Invests in Aimé Leon Dore

LVMH’s Luxury Ventures investment vehicle has taken a minority stake in budding New York-based fashion brand Aimé Leon Dore. While the terms of the investment – which appears as though it might be the latest deal to have been brokered by Alexandre Arnault – have not been disclosed, LVMH typically Luxury Ventures typically targets investments ranging from €2 million to €15 million. In a statement on Tuesday, Aimé Leon Dore founder Teddy Santis stated, “LVMH’s vast network of global leaders across the industry and its rich history in growing exceptional storied brands offers a truly unique partnership opportunity to fuel the next chapter of growth for Aimé Leon Dore.”

Jan. 13, 2022 – LVMH Luxury Ventures Takes a Stake in Heat

Mystery boxes are the latest target of investment for LVMH’s Luxury Ventures, with the French luxury goods conglomerate’s fund among the parties to a $5 million round raised by Heat. OTB Group board member and BVX CEO Stefano Rosso, Singapore-headquartered VC firm Antler, L Catterton partner Michael Mitterlehner, Spotify Director of Global Growth Sven Ahrens, and the Hermès family are some of the other investors in London-based Heat’s seed round, the funds from which will be used to “implement gamification, AI-driven personalization, and interactive drops, all while driving sustainability,” the company revealed.

Nov. 22, 2021 – CVC Capital, HPS Investment Take Stake in Authentic Brands

Private equity firms CVC Capital Partners and HPS Investment Partners have acquired “significant equity stakes” in Authentic Brands Group, putting a a $12.7 billion enterprise value on the company and prompting it to postpone a previously-planned planned initial public offering until at least 2023. In a statement, ABG said that “since its founding in 2010, [it] has experienced significant growth by implementing a proven playbook that connects strong brands with best-in-class licensees and a network of partners to optimize value in the marketplace.” Among the 30 or so brands under its ownership umbrella are Forever 21, Barneys New York, Aeropostale, Brooks Brothers, and Vision Street Wear.

Sept. 23, 2021 – G-III to Acquire Sonia Rykiel

G-III Apparel Group revealed that it has entered into an M&A agreement to purchase Sonia Rykiel, with plans to accelerate the relaunch of the French fashion brand primarily in Europe, for the fall of 2022, with collections across multiple categories. The transaction, which comes less than two years after brothers Eric and Michael Dayan successfully bid to acquire all of the bankrupt brand’s assets via a court-administered process. (Those assets included the brand’s intellectual property rights (namely, its various global trademark registrations, and decades of archives and product prototypes); the commercial leases for its brick-and-mortar outposts in France – from its Saint Germain flagship to a glitzy boutique in Cannes, among others; and its remaining stock of garments and accessories.)

The fashion-centric M&A deal is expected to close by the end of October 2021.

Aug. 24, 2021 – Chanel Takes Majority Stake in Paima

Chanel has taken a majority stake in Italian knitwear company Paima, a move that falls in line with a larger pattern of luxury giants looking gain greater control over their supply chains by bringing key third-party companies under their own roofs. “This decision has been motivated by converging interests,” Chanel asserted in a statement, noting that while Paima, which has been a supplier for the French fashion brand for 25 years, “has seen its development accelerate in recent years, it seemed appropriate to have a solid partner to help it grow [further] and invest.” More than that, Chanel revealed that the investment “provides a more sustainable collaboration framework by continuing an already established relationship.”

Aug. 12, 2021 – Authentic Brands Group Buys Reebok

Adidas is selling its Reebok brand to Authentic Brands Groups for up to 2.1 billion euros ($2.46 billion), with the German sporting wear group looking to “focus on its core brand after the U.S. fitness label failed to live up to expectations,” per Reuters. Authentic Brand, which filed its preliminary IPO documentation in July, has been on a buying streak in the past few years, with the brand developer buying up an array of fashion and apparel companies, ranging from Juicy Couture and Judith Leiber to Jones New York, Volcom, and Aeropostale.

Jul. 28, 2021 – Aeffe Takes Full Control of Moschino 

Italian fashion and luxury goods group Aeffe S.p.A. acquired the remaining 30 percent of Moschino in an M&A deal that will see it pay 66.6 million euros ($78.51 million), and bring its holding of the company to 100 percent and the valuation of the Jeremy Scott-designed brand to $261.7 million. Aeffe also owns Alberta Ferretti, Philosophy by Lorenzo Serafini and Pollini.

In a statement, Aeffe Executive Chairman Massimo Ferretti said, “The operation we have just concluded has long been considered an important step in our medium-long term growth strategy. With the full control over MOSCHINO brand, we are now in the best conditions to manage all activities related to the brand’s value chain, from product to quality and with positive effects on image, distribution and communication.”

Jul. 20, 2021 – LVMH Takes Majority Stake in Off-White

LVMH announced on Tuesday that it is taking a majority stake in Off-White, the upscale fashion/streetwear brand that Virgil Abloh launched in 2013 via a new M&A deal. In a statement, LVMH revealed that in addition to taking a 60 percent stake in Off-White, it has entered into a new “arrangement” with Abloh to “jointly pursue new projects across luxury categories.” 

Jul. 18, 2021 – L Catterton Takes Majority Stake in Etro

Italian fashion brand Etro announced on July 18 that it entered into a binding M&A agreement to partner with L Catterton. Under the terms of the agreement, LVMH-affiliated L Catterton Europe will acquire a majority stake in Etro, while the Etro family will retain a significant minority. Etro Founder Gerolamo Etro will be appointed as Chairman of the company.

Jul. 12, 2021 – LVMH Takes Minority Stake in Phoebe Philo

Phoebe Philo announced that she is launching her own label after spending three and a half years out of the spotlight following her 10-year tenure with Celine, and revealed that LVMH has taken a minority stake in her soon-to-launch label. The size of LVMH’s minority position and the terms of the deal have not been disclosed.

Jul. 11, 2021 – Nordstrom Takes Stake in Four ASOS Brands

Nordstrom announced that it has acquired a minority stake in four apparel brands owned by British fashion group ASOS. Topshop, Topman, Miss Selfridge and the activewear label HIIT, which ASOS acquired from Arcadia Group for £295 million ($407.21 million) in February 2021, will enable the U.S. department store chain to target millennial and Gen-Z consumers. Financial terms of the M&A deal have not been disclosed.

Jul. 8, 2021 – Kering Acquires LINDBERG

Kering is bolstering its eyewear division by way of a deal in which Kering Eyewear will acquire 100 percent of the share capital of LINDBERG. The acquisition is “an important milestone in the successful expansion of Kering Eyewear and perfectly fits with its development strategy,” according to Kering, which launched its eyewear division in 2014, a venture that it says consists of “an innovative business model that has enabled [it] to reach a critical size in the market with close to €600 million wholesale external revenues” as of FY2019.

Jul. 7, 2021 – Glossier Raises $80 Million in Latest Round

Glossier announced that it has raised $80 million in Series E funding. The round, which was led by Lone Pine Capital with participation from existing investors Forerunner Ventures, Index Ventures, IVP, Sequoia Capital, and Thrive Capital, values the millennial-focused beauty company at $1.8 billion.

Jun. 30, 2021 – Richemont Acquires Delvaux

Cartier owner Richemont announced on Wednesday that it has acquired a 100 percent stake in Belgian luxury leather goods brand Delvaux in “a private transaction.” Founded in 1829, Richemont says that Delvaux is the oldest luxury leather goods Maison in the world. The Swiss conglomerate revealed that the transaction has “no material financial impact on [its] consolidated net assets or operating result for the year ending March 31, 2022,” and that Delvaux’s revenues will be reported within its “Other” business area.

The M&A deal appears to be a sign that Richemont is looking to bolster its softer luxury (and maybe even fashion) offerings, having built its name in the hard luxury (i.e., jewelry and watches) segment of the market.

Jun. 24, 2021 – GOAT Nabs $3.7 Billion Valuation with New Round

Online sneaker and apparel marketplace GOAT Group has raised $195 million in a new funding round, which has “more than doubled its valuation to $3.7 billion,” per Reuters. The Los Angeles-based company, which was founded in 2015, boasts some 30 million customers across 170 countries, and “posted gross merchandise value, which represents the total volume of goods sold, of $2 billion over the past year as sales of sneakers and apparel surged.”

The buzzy platform made headlines early this year when it announced that it had welcomed a “strategic investment” from Groupe Artemis – the controlling shareholder of Gucci, Balenciaga, Saint Laurent, and Bottega Veneta’s parent company Kering – as it “continues its expansion in fashion apparel and new categories.” (It also garnered attention in connection with a settlement in the trademark lawsuit filed against it by London-based brand Goat Fashion.)

Jun. 24, 2021 – Kering Takes Stake in Luxury Rental Co. Cocoon

Kering has taken an undisclosed stake in a luxury rental company. In a statement on Thursday, Kering announced that it has invested in Cocoon, a London-based startup that specializes in facilitating rentals for luxury handbags – including offerings from upwards of 30 brands, such as Kering-owned Gucci, Balenciaga, and Bottega Veneta – with the investment coming as part of a larger $3.5 million round that also included participation from resale platform Depop’s founder Simon Beckerman, among others. Kering’s chief client and digital officer Gregory Boutte said the deal is part of a larger strategy by the conglomerate to invest in innovative young companies. 

Jun. 22, 2021 – Prada, Zegna Take Stakes in Cashmere Supplier

Prada has partnered with fellow Italian fashion company Ermenegildo Zegna Group to acquire a controlling stake in Italian cashmere producer Filati Biagioli Modesto in furtherance of a quest to “secure a domestic supply chain and luxury-goods manufacturing expertise.” The two big-name fashion entities will each take a 40 percent stake in the Montale-based supplier, which is known for its Italian cashmere and “noble yarns,” while the Biagioli family will hold on to 15 percent of the company, and newly-appointed CEO Renato Cotto – who recently served as a director at LVMH’s Loro Piana – will assume a 5 percent holding. 

Jun. 18, 2021 – LVMH Takes Full Control of Pucci

LVMH Moët Hennessy Louis Vuitton acquired the outstanding 33 percent stake in Emilio Pucci just over two decades after it paid an undisclosed sum for a 67 percent ownership stake in the Italian fashion house in 2000. In a statement on Friday, as first reported by WWD, Toni Belloni, LVMH’s group managing director thanked the Pucci family, and in particular, Laudomia Pucci, the daughter of founder Emilio Pucci, who has served as the Deputy Chairman and Image Director of the brand, “for their friendship and collaboration over the years.” In conjunction with the deal, Ms. Pucci will step down from her current role and “dedicate herself to the archives and promoting the heritage of her late father.”

Jun. 10, 2021 – Fosun Fashion Group Nabs Sergio Rossi in M&A Deal

In a statement on June 10, Fosun Fashion Group revealed that it has signed a M&A agreement to acquire 100 percent of Sergio Rossi S.p.A from from Absolute Luxury Holding S.r.l., an independently-managed investment subsidiary of Investindustrial V L.P., for an undisclosed sum. The Shanghai-headquartered group stated that the acquisition will “further enrich FFG’s luxury brand portfolio, which currently includes Lanvin, Wolford, Caruso and St. John Knits, complementing the group’s core competency through luxury accessories.”

Jun. 8, 2021 – Sequoia Takes Stake in SSENSE

SSENSE announced that it has sold an undisclosed stake in the company to California-based venture capital firm Sequoia Capital in a M&A deal that values the fashion e-commerce retailer at 5 billion CAD ($4.13 billion). As for what the investment might entail, it appears that the high fashion-focused retailer has set its sights on expansion in China, as Angelica Cheung, the former editor-in-chief of Vogue China, who joined Sequoia Capital China as a venture partner in February, will join the SSENSE’s board in connection with the deal.

Apr. 22, 2021 – LVMH Boosts Stake in Tod’s

Tod’s revealed that LVMH will boost its exist stake in Tod’s to 10 percent by way of a new 6.8 percent increase. “A source close to the matter said the French giant does not expect to raise its stake further for now,” Reuters reported, noting that Tod’s founder and chairman Diego Della Valle has been a member of LVMH’s board of directors since 2002. While Della Valle has repeatedly denied longstanding chatter about a takeover, he stated on Thursday that “this may represent an excellent reason to consider further opportunities to be taken in the future ahead,” referring to LVMH’s stake increase.

Mar. 25, 2021 – Made in Italy Fund acquires Dondup

Made in Italy Fund has acquired Milan-based fashion brand Dondup from fellow private equity firm L Catterton for an undisclosed sum. “The fund said it aims at creating a fashion conglomerate with Dondup and other fashion brands it owns – 120%Lino, known for its linen clothes, and jewellery and accessories maker Rosantica – and expanding their foothold in Europe and the United States, Reuters reported. The firm also maintains a majority stake in 6-year old Italian streetwear label GCDS, which it acquired in November 2020.

Mar. 8, 2021 – Ferrari owner Exor takes 24% stake in Louboutin

Exor Group – the $30 billion Netherlands-incorporated investment group run by the Italian Agnelli family and the largest shareholder in Italian automaker Ferrari – announced that it will take a 24 percent stake in the independently-owned Louboutin in exchange for 541 million euros ($640 million), a deal that values the 30-year old Paris-based footwear brand at $2.3 billion euros ($2.73 billion) and sets it up for expansion, particularly in China.

Mar. 5, 2021 – Margiela-owner OTB acquires Jil Sander

Japanese apparel group Onward Holdings announced that it will sell fashion brand Jil Sander to Renzo Rosso’s luxury group, OTB, the parent of Diesel, Maison Margiela, Marni, Amiri, and Viktor & Rolf. The financial figures associated with the M&A deal remain undisclosed.

Mar. 1, 2021 – Kering leads $216 million Vesitaire round

Kering and American investment firm Tiger Global Management are leading a new funding round that sees secondhand marketplace Vestiaire Collective bring in $216 million in new funding, along with existing investors, including its CEO Max Bittner, Vogue’s parent company Condé Nast, and the Eurazeo Group, among others. The deal gives Paris-based Vestiaire “unicorn status” – i.e., puts a $1 billion-plus value on the privately-held company – and “ideally positions it for its next cycle of accelerated growth.” 

Dec. 9, 2020 – Exor Group acquires Shang Xia

Ferrari owner Exor Group announced that it will invest “around €80 million [$96.9 million] in Chinese brand Shang Xia via a reserved capital increase that will result in it becoming the company’s majority shareholder.” Exor noted that Hermès – which “has accompanied Shang Xia successfully throughout the initial phase of its development – will remain as an important shareholder alongside Exor and [founder] Jiang Qiong Er.”

Dec. 7, 2020 – Moncler acquires Stone Island

Moncler announced that it will acquire Italian fashion label Stone Island for $1.4 billion. The Milan-headquartered luxury outerwear company will “purchase 70 percent of Stone Island’s parent company SPW from Chief Executive Officer Carlo Rivetti and other members of his family, [and] then buy the remaining 30 percent from Singapore’s state investor Temasek” in furtherance of a two-step transaction. 

Nov. 9, 2020 – VF Corp. acquires Supreme for $2.1 billion

Three years after Supreme sold off a reported 50 percent stake to private equity giant Carlyle Group, VF Corp revealed that it will pay $2.1 billion to buy popular streetwear brand. The deal – which was formally completed on December 28, 2020 – saw VF Corp. take full ownership of Supreme, with current Supreme investors Carlyle Group and New York-based private equity firm Goode Partners agreeing to sell their stakes in the New York-based brand. 

Nov. 5, 2020 – Alibaba, Richemont invest $1.1 billion in Farfetch

Alibaba Group Holding and Richemont announced that they will invest $1.1 billion in online luxury fashion retailer Farfetch and its new marketplace in China. At the same time, Artemis – an investment vehicle tied to Gucci owner Kering – simultaneously announced that it would increase its stake in Farfetch with a $50 million injection of cash in exchange for Farfetch’s Class A ordinary shares. 

Oct. 29, 2020 – LVMH and Tiffany & Co. agree to $15.8 billion M&A

LVMH Moët Hennessy Louis Vuitton and Tiffany & Co. managed to salvage their meger deal, with the French luxury goods conglomerate agreeing to pay a few dollars less per share to acquire the New York-based jewelry company. In a statement, the parties confirmed that LVMH will pay $131.5 per Tiffany share, down from the $135/share price tag they initially agreed to in November 2019 before the onset of the COVID-19 pandemic.

*This article was initially published on March 1, 2021, and has been updated accordingly.

Counsel for Ryder Ripps has responded to the lawsuit waged against him and his business partner Jeremy Cahen by Yuga Labs, arguing that the company behind the Bored Ape Yacht Club (“BAYC”) is looking to silence him for calling out the allegedly “racist and neo-Nazi” nature of the popular – and expensive – collection of non-fungible tokens (“NFTs”). According to the anti-SLAPP motion that they filed with the U.S. District Court for the Central District of California on Monday, Ripps and Cahen claim that Yuga Labs’s lawsuit is little more than “an attempt to silence an artist who used his craft to call out a multi-billion-dollar company built on racist and neo-Nazi dog whistles” by way of “the satirical NFT collection” that Ripps created, called the “Ryder Ripps Bored Ape Yacht Club.” 

In their newly-filed motion, in which Ripps and Cahen are seeking to have Yuga’s complaint dismissed on anti-SLAPP grounds or alternatively, for failing to allege a plausible cause of action, counsel for the defendants asserts that the “obvious purpose” of Yuga’s lawsuit is “to bully Mr. Ripps and Mr. Cahen into silence,” and that such a suit is “precisely why anti-SLAPP statutes exist.” (Enacted in 1992, California’s anti-Strategic Lawsuits Against Public Participation statute protects parties from lawsuits brought to “chill the valid exercise of constitutional rights of free speech,” and provides parties with the ability to file a special motion to strike a complaint or parts of a complaint when a case has been filed “primarily to discourage speech about issues of public significance,” which is what the defendants argue is going on in the case at hand.) 

Setting the stage, the defendants assert that in response to Yuga’s BAYC project, Ripps sought to call out the alleged “racism” at the heart of the collection of 10,000 NFTs tied to images of apes. Specifically, Ripps created the RR/BAYC project “in connection with his [existing] efforts to expose Yuga’s neo-Nazi and alt-right references,” namely, Yuga’s alleged practice of “systematically embedd[ing]” the BAYC collection of NFTs, and “related promotional activities and Yuga’s corporate designs … with dog whistles common among neo-Nazis, alt-right groups, and racist bulletins within websites like 4chan.” 

Ryder Ripps Yuga
Two examples of allegedly “racist” NFTs from Yuga’s BAYC collection

Counsel for Ripps and Cahen claims that in response to Ripps’s efforts to “expos[e] Yuga’s misconduct,” the Miami-based company sued him – albeit “not for defamation but for trademark infringement,” as well as false designation of origin, cybersquatting, and conversion, on the basis that Ripps created and sold NFTs bearing “the very same trademarks that Yuga Labs uses to promote and sell authentic BAYC NFTs.” 

Ripps and Cahen allege that while “there are dozens of entities that create knock-off ape NFTs that make no artistic or critical commentary,” Yuga “never brought action against any of [those] NFT collections.” Instead, they claim that Yuga “did – without warning – bring this action against [them]” in order to “bully [them] into silence.” This is part of a larger “campaign [by Yuga] aimed at silencing Mr. Ripps’s artistic expression and related criticism of [its] connections to neo-Nazi and alt-right culture,” according to Ripps and Cahen’s motion. The problem with that – and with Yuga’s lawsuit – the defendants assert, is that “the First Amendment and the Rogers test preclude exactly this kind of abusive trademark infringement lawsuit.”

In pushing for the court to strike the complaint, counsel for Ripps and Cahen asset that “the accused RR/BAYC project is protected speech made in connection with a public issue and the complaint does not allege legally sufficient facts to support a cause of action.” Among other things, they claim that “anti-SLAPP immunity protects the accused RR/BAYC project because the project is performance and appropriation art,” which Ripps created “with the specific aim” of addressing a “public issue,” namely, how Yuga’s founders “have embedded Yuga and the BAYC collection with racist and neo-Nazi dog whistles.” 

In furtherance of their anti-SLAPP argument, Ryder Ripps and Cahen also assert that Yuga has not plausibly alleged trademark infringement, as they are shielded from liability by the tenets of the Rogers v. Grimaldi case, which apply to the RR/BAYC project (and also to the MetaBirkins NFTs, counsel for Mason Rothschild successfully argued in a separate NFT-centric lawsuit). Under Rogers, which “insulates artistic free speech from claims of trademark infringement,” the defendants assert that “trademark claims are actionable only if the accused use of a trademark is ‘(1) not artistically relevant to the underlying work or (2) explicitly misleads consumers as to the source of the content of the work.’” They claim that RR/BAYC prevails on both prongs, as “Yuga has conceded in its complaint that the BAYC marks are artistically relevant to the RR/BAYC project,” and second, “Yuga has failed to allege (and cannot allege) that Mr. Ripps explicitly misled consumers as to the source of RR/BAYC NFTs.”

Ryder Ripps Yuga

To the contrary, Ripps claims that “Yuga repeatedly alleged that [he] publicly communicated that RR/BAYC NFTs are not Yuga products.” In sum, Ripps claims that Yuga’s complaint “consistently alleges that [he] differentiated the RR/BAYC project from Yuga’s NFTs, [which] is the opposite of the ‘explicitly misleading’ use that Rogers requires.” For instance, “Yuga extensively pleaded that Mr. Ripps promoted the RR/BAYC project as distinct and antithetical to Yuga’s NFTs, including on the RR/BAYC website and the disclaimer that every purchaser was required to sign.”

The argument against likelihood of confusion as a result of the disclaimer is an interesting one, but might not go far enough, as while the RR/BAYC site requires users to agree to the disclaimer “acknowledg[ing] that RR/BAYC NFTs are ‘a new mint of BAYC imagery, recontextualizing it for educational purposes, as protest and satirical commentary,'” other platforms where the RR/BAYC NFTs might be resold do not have the same requirement. It is worth noting that the defendants claim that when it comes to third-party sites, “Yuga’s complaint also repeatedly shows that the two parties’ offerings are differentiated,” with the OpenSea marketplace images included in Yuga’s complaint, for instance, showing that “Mr. Ripps’s NFTs were labeled as part of the ‘RR/BAYC’ collection and not the ‘Bored Ape Yacht Club’ collection.”

(Not the only NFT case that includes arguments over disclaimers, Hermès takes issue with Rothschild’s claims about his inclusion of a disclaimer on the metabirkins.com site, stating that the NFTs are “not affiliated, associated, authorized, endorsed by, or in any way officially connected with the HERMES, or any of its subsidiaries or its affiliates.” According to Hermès, the “METABIRKINS website is the only advertising channel on which Defendant includes this disclaimer. The disclaimer is notably absent from Rarible, the current point of sale for the METABIRKINS NFTs. The disclaimer is also absent from Defendant’s METABIRKINS social media accounts and Discord channel, where the METABIRKINS NFTs are prominently advertised.”)

And in the event that their anti-SLAPP claims are not enough, counsel for Ripps argues that Yuga’s trademark infringement claims based on the RR/BAYC project “also fail because [Ripps’] use of Yuga’s marks is nominative fair use,” as the project “would not be readily identifiable, or even possible, without using Yuga’s marks to conjure up the BAYC collection – the subject of Mr. Ripps’s critique,” Ripps “used BAYC’s marks only to the extent reasonably necessary,” and Ripps “has done nothing to suggest sponsorship or endorsement by Yuga.”

With the foregoing in mind, Ripps and Cahen request that the court strike Yuga’s complaint and award them fees and costs incurred in connection with the suit thus far, or in the alternative, dismiss Yuga’s claims pursuant to Rule 12(b)(6). 

The case is Yuga Labs, Inc. v. Ryder Ripps, et al., 2:22-cv-04355 (C.D. Cal.).

A new opinion in a case over the marketing of products as “100% Recyclable” could have some interesting implications for the fashion industry. A New York federal court sided with Niagara Bottling, granting the California-based company’s motion to dismiss the lawsuit that Edalia Duchimaza filed against it over its allegedly “false and misleading” marketing of its water bottles as entirely recyclable when parts of the bottles are not capable of being recycled. According to the complaint that she filed in July 2021, Duchimaza alleged that Niagara ran afoul of New York state law for advertising its Kirkland water bottles as recyclable when certain components – namely, the labels and some bottle caps – are not made of recyclable material, and “low recycling capacity” in New York state makes the other components “effectively non-recyclable.”

In furtherance of her claims of false advertising (under New York’s General Business Law), fraud, breach of express warranty, and unjust enrichment, Duchimaza asserted that Niagara knows that its products are “made of unrecyclable materials or end up in landfills and yet, continues to market its products as ‘100% Recyclable,’” making the representation purely “to capitalize on [consumer] demand for environmentally friendly products.” Against that background, she claimed that Niagara “intends for reasonable consumers to believe – and reasonable consumers do believe – that the products [can] be recycled if disposed of in a recycling bin,” prompting consumers to pay a “price premium” for its products. 

In the motion to dismiss that it lodged in November 2021, Niagara argued that the court should toss out the case on the basis that Duchimaza lacks standing. Specifically, the defendant claimed that Duchimaza failed to adequately plead: (1) injury-in-fact sufficient to support her damages claims;” (2) a risk of future injury sufficient to support her claims for injunction relief; and (3) standing as to her class claims. 

Recyclable Fashion

Reflecting on Niagara’s arguments in its motion to dismiss, Judge Paul A. Engelmayer of the U.S. District Court for the Southern District of New York primarily determined that Duchimaza’s allegation that she “paid a price premium for the products because Niagara’s allegedly false and misleading ‘100% Recyclable’ claim drove up the sales price of the products” is sufficient to plead injury in fact. Citing precedent from the Second Circuit, Judge Engelmayer stated that “substantial economic harm is plainly the type of injury for which parties may seek redress in federal court,” noting that Duchimaza “plausibly alleges that she bought products – bottled Niagara water – whose price was inflated.” 

Duchimaza is less successful when it comes to pleading risk of future injury that is sufficient to support her claims for injunction relief. “Critically,” the Judge states that she does not plead that she intends to repurchase the bottles; instead, in the amended complaint, Duchimaza only alleges that has “the desire to purchase water bottles from Niagara that are, in fact, 100% recyclable, but cannot rely on Niagara’s representation’s regarding recyclability.” These allegations, “although rectifiable, do not plead an injury-in-fact to support injunctive relief,” according to Judge Engelmayer, who states that as other courts in this Circuit have held, “allegations that the plaintiff would purchase a product if re-engineered or re-marketed does not plead real or immediate threat of future injury.” As such, the Judge held that she lacks standing to seeking injunctive relief. 

The FTC’s Green Guides

Additionally, Niagara moves to dismiss Duchimaza damages claims, which stem from its alleged false advertising, fraud, breach of express warranty, and unjust enrichment. Niagara contends that Duchimaza fails to allege that the “100% Recyclable” claim is false or likely to mislead a reasonable consumer. Niagara “relatedly” argues, according to Judge Engelmayer, that its statements “comply with the Federal Trade Commission’s Green Guides, which the New York General Business Law incorporates, and that this shields it from liability.” 

The Judge notes that the parties agree that the term “recyclable” is a term of art and that the Green Guides inform its meaning. The Guides state, “A product or package should not be marketed as recyclable unless it can be collected, separated, or otherwise recovered from the waste stream through an established recycling program for reuse or use in manufacturing or assembling another item … Marketers should clearly and prominently qualify recyclable claims to the extent necessary to avoid deception about the availability of recycling programs and collection sites to consumers.” 

At the same time, the court states that the Green Guides contains exceptions, including one that enables marketers to “make unqualified recyclable claims provided that ‘recycling facilities are available to a substantial majority of consumers or communities where the item is sold,’” (with the FTC defining substantial majority as “at least 60%”), and another that enables marketers to “make unqualified claims where ‘the entire product or package, excluding minor incidental components, is recyclable.’” 

Judge Engelmayer sides with Niagara here, finding that Duchimaza does not allege in her amended complaint that recycling facilities are not available in New York or are available to fewer than 60 percent of consumers. As for the bottle caps and labels, the issue, according to the Judge, is whether these qualify as “minor incidental components.” (Niagara argues that they are, and thus, its “100% Recyclable” statement need not be qualified.) While the determination regarding the caps is straightforward, as the FTC’s Guides specifically state that bottle caps are an example of a “minor, incidental component,” the labels are less obvious, but, nonetheless, still a “minor, incidental component.” 

Granting the motion in full, Judge Engelmayer states that while Duchimaza’s false advertising claims are dismissed with prejudice given that the representation that the Niagara bottles are “100% recyclable” is not plausibly pled to be false or misleading. He similarly determined that the fraud, breach of express warranty, and unjust enrichment should be dismissed. However, Duchimaza’s breach of express warranty claim was dismissed without prejudice “because, on its first motion to dismiss, Niagara did not attack the original complaint on t he ground on which the Court dismissed that claim, and, given the nature of its defect, that claim may be capable of successful repleading.”

A Couple of Takeaways 

In light of the rising number of companies, including fashion brands, that are looking to attract consumers by way of sustainability credentials and claims about “recyclable” products (including ones that they cannot substantiate), and the advertising-centric lawsuits that are being filed as a result, the case provides some potential takeaways for brands across industries. Among other things, the case is striking from a standing perspective, with the court finding that the plaintiff adequately pled standing for damages even without alleging that the particular water bottles that she purchased and placed in a recycling bin were not actually recycled. This is because she centered her false advertising claim on the fact that she paid a “price premium” based on the misrepresentation that the water bottles were “100% Recyclable.” 

The Judge’s determination that such an allegation is sufficient to plead standing for damages is in line with a federal district court in Illinois’ decision earlier this year in a separate “sustainability” marketing case. In a false advertising and state consumer protection statute lawsuit against ALDI, plaintiff Jessica Rawson argued that the supermarket chain “advertised its [salmon] product as having a unique quality – sustainability – that [she] paid more for.” It is enough, the court found, that Rawson alleged that she paid a premium for what she believed was a sustainably sourced product, which enables her to “go beyond merely alleging that she would not have bought the product absent the allegedly deceptive practice.” 

The courts’ findings in both cases are noteworthy given that a growing number of plaintiffs have already made similar “pricing premium” arguments against brands in other sustainability marketing-focused lawsuits, and the district courts’ determinations could serve to embolden new plaintiffs to file suit on similar grounds.

Beyond that, the court’s reliance in the case at hand on the FTC’s Green Guides – which it refers to “regulations … promulgated by the FTC” that “establish commercial practices regarding recyclability claims” – is worth paying attention to. While she is “not sure that the Guides are ‘rules’ or ‘regulations’ in the ordinary sense, given that they cannot be relied on directly by the FTC to impose liability but merely indicate what the agency considers to be false or misleading,” Harvard Law School Rebecca Tushnet states that it is “not clear that anybody in this case pressed that question.”

Either way, the court’s willingness to defer to the Guides when it comes to defining “recyclable” (and determining when marketers can avoid making qualified claims) is intriguing in light of the overarching lack of uniform definitions for many of the terms that are being tossed around by brands in eco-focused ad campaigns. To date, the FTC has opted not to define increasingly-widely-used terms like “sustainable” or even “net-zero” by way of its Green Guides, which were first issued in 1992 to help businesses avoid violations of the FTC Act based on misleading environmental claims. However, the Guides are slated to get a review by the government regulator this year, and ultimately, may prove to be more helpful for advertisers scrambling to add “eco” elements to their marketing, with the FTC expected to give “special consideration to [advertisers’] reliance on certifications,” according to Crowell & Moring LLP’s Roy Abernathy, Raija Horstman, Dalton Hughes, Emily Kappers, and Amy Pauli, as well as to “recyclability guidelines.”

The case is Duchimaza v. Niagara Bottling, LLC, 1:21-cv-06434 (SDNY).

A rule requiring companies listed on the Nasdaq to publicly disclose diversity statistics regarding their board of directors is in effect. On the heels of a Nasdaq-proposed rule (Rule 5606) being approved by the U.S. Securities and Exchange Commission in August 2021, companies listed on the exchange have to make such disclosures either in an SEC filing or on their own websites – by way of a Board Diversity Matrix – by August 8 or the date the company files its 2022 proxy, whichever is later. First introduced in early 2021, the rule aims to “provide stakeholders with a better understanding of [a] company’s current board composition and enhance investor confidence that all listed companies are considering diversity in the context of selecting directors.”

To summarize Nasdaq-listed companies’ current obligations under the diversity-focused rule, Goodwin Procter LLP’s Sean Donahue and John Newell state that “if a Nasdaq-listed operating company has already filed its 2022 proxy or information statement for its annual meeting and a Form 10-K or Form 20-F during 2022, but did not include the Nasdaq Board Diversity Matrix in one of those filings, it is required to disclose its Board Diversity Matrix on the company’s website on or before August 8, 2022.” 

In the Board Diversity Matrix, companies must disclose the total number of directors on the board, as well as the number of directors based on gender identity (female, male, or non-binary) and the number of directors who did not disclose gender; the number of directors based on race and ethnicity (African American or Black, Alaskan Native or Native American, Asian, Hispanic or Latinx, Native Hawaiian or Pacific Islander, White, or Two or More Races or Ethnicities), disaggregated by gender identity (or did not disclose gender); the number of directors who self-identify as LGBTQ+; and the number of directors who did not disclose their race and ethnicity and whether they identify as LGBTQ+.

For companies that have yet to file their proxy or information statement, Form 10-K, or Form 20-F for 2022, those companies “do not have to post the Board Diversity Matrix on their website by August 8, 2022 so long as they include it in their proxy statement, Form 10-K, or Form 20-F filed no later than December 31, 2022 or post it on their website on such date,” per Donahue and John Newell, who note that this timeline only applies to companies that were listed on the Nasdaq before August 6, 2021. Companies listed on or after that date are required to make diversity discloses by way of the Nasdaq Board Diversity Matrix one year from the date of listing.

A second stage of reporting, which begins on August 7, 2023, calls on listed companies to have (and report) or explain why they do not have at least one diverse director, and ultimately, will need to have or explain why they do not have at least two diverse directors. “Certain relief is provided for Smaller Reporting Companies and Foreign Issuers, as well as companies with five or fewer directors,” according to Bryan Cave’s Victoria Westerhaus and R. Randall Wang. 

Reflecting on the approval of the Nasdaq proposal back in August 2021, SEC Chairman Gary Gensler said in a statement, “These rules will allow investors to gain a better understanding of Nasdaq-listed companies’ approach to board diversity, while ensuring that those companies have the flexibility to make decisions that best serve their shareholders.” Not all of the SEC’s commissioners were on board, with Commissioner Hester Peirce voting against the proposal, and Commissioner Elad Roisman issuing a partial dissent, in which he anticipated future legal issues being born from the new rule given the SEC’s role as the “adjudicating body for exchange delisting decisions.” 

One of Roisman’s “serious concerns” on this front stems from the fact that “the SEC – without any doubt, a state actor – may need to take future action in which the agency must consider disclosure of the racial, ethnic, gender, or LGTBQ+ status of individual directors.” 

More broadly, the 3-2 split on the SEC “reflects a broad and deepening divide concerning recent SEC moves in the ESG space, including disclosures related to climate risk,” Mintz stated in a client note at the time. “The significant dissent among the SEC commissioners suggests that there will be substantial opposition to any new disclosure requirements focusing on ESG, and that efforts may be made by the regulated industries to delay any rule-making in the expectation of a different political balance on the SEC within a few years.” 

Additional rule-making is, nonetheless, expected in light of increasing demand for board diversity and related disclosures, paired with a larger push for attention to ESG issues more generally and uniform reporting by publicly-traded entities on this front.