According to WWD, reaching $25 million in sales is a key number indicating a brand could go from fledgling design house to becoming a major corporate fashion player. Of course, having a clear focus to sell to consumers, and working with efficient margins, are also earmarks of a label’s lasting success. As yet another New York Fashion Week rages around us, what other factors, besides the $25 million magic number, contribute to a brand’s longevity?
- Buzz: Well, of course. Newer brands with a lot of publicity might only need one salesperson to deal with orders. But the more low-profile a young company is, the more people it needs booking orders (and that gets pricey).
- Capsule collections: For younger brands especially, bringing in revenue from design fees for one-off lines with bigger retailers is invaluable. Think Jason Wu’s recent collection for Target.
- Licensing: Once a line hits the $25 million sales mark, it might be well-known enough for the designer to broker a lucrative licensing deal, usually starting with fragrance. Other areas to license out one’s name include jeans and bags.
After capsule collections and licensing, what’s the next step into the big leagues? That’s usually where private equity comes in. Jimmy Choo, which was bought by a private equity firm in 2007, is a perfect example. It has grown into a global brand, and was sold in 2011 to the luxury goods group Labelux. To gain interest — and investment — from a private equity firm, fashion houses might need to make it to around $60 million in total sales. But if they reach that and get the support of a major backer, growth can often continue unbridled.