New Guards Group, the fashion group founded in 2015 by DJ-slash-designer Marcelo Burlon, Claudio Antonioli of multi-brand boutique antonioli.eu, and fashion production and distribution mastermind Davide de Giglio, has been snapped up by online retailer Farfetch for a cool $675 million. The announcement – which will see FarFetch take control over an arsenal of exclusive licenses in buzzy streetwear brands, such as Off-White, Palm Angels and Heron Preston – prompted the not-yet-profitable London-based FarFetch’s New York Stock Exchange-traded stock to drop 40 percent in after-hours trading.
According to a press release from Farfetch on Thursday evening, it will to purchase 100 percent of the shares of New Guards in a deal expected to close later this year. The release states that New Guards – which operates by “providing the resources and expertise to transform early stage brands into profitable, high growth businesses, driving rapid, profitable growth” – owns “majority stakes (75% on average) in seven popular brands.” Under its umbrella are Marcelo Burlon County of Milan, Off-White c/o Virgil Abloh, Palm Angels, Unravel Project, Heron Preston, A Plan Application, Alanui, and Kirin by Peggy Gou.
A majority stake in the most famous of its brands – Off-White – is “controlled by Virgil Abloh,” and Off-White, itself, “owns the trademark of [the] brand,” Abloh told British Vogue. “New Gaurds Group is our exclusive licensee pursuant to a multiyear agreement,” he stated in connection with his brand’s ownership structure.
Speaking on the heels of the announcement, Farfetch CEO José Neves said on a call that New Guards – which brought in revenue of $345 million for the 12 months ending on April 30, with profits before tax of $95 million – owns or licenses some of the most sought-after luxury brands, and it has demonstrated it is the ultimate brand platform of today.” He further asserted that “the addition of New Guards’ brand platform brings a creative and industrial dimension to our suite of capabilities.”
Yet, investors are far from convinced. As Vogue Business stated on Friday, “Mounting losses make it difficult for many investors to get comfortable with Farfetch, and its recent M&A activity — which also includes Stadium Goods — hasn’t been cheap,” citing Jane Hali & Associates analyst Jessica Ramirez. The acquisition announcement comes just a month after publishing giant Conde Nast pulled its entire $293 million stake in Farfetch “amid concerns over how the luxury marketplace is being managed,” the Times reported in July.
Nonetheless, Neves seems undeterred, saying on Thursday that the latest moves by online fashion platform – which relies heavily on “capital-light” model of not holding inventory but instead connecting consumers to third-party stockists and taking a cut of the sale – “will help it to deliver our brand-of-the-future strategy and will have significant benefits for our other members.”