The IPO Rush Transforming Fashion – WWD

In a changing world there is at least one constant: fashion still knows how to find a trend and follow it.

In 2021, it was the IPO.

Despite the pandemic, social distancing and the rest, government stimulus has helped keep consumer spending and the stock market alive this year.

With Wall Street repeatedly setting new highs after a short and very steep lockdown recession, the takeover was simply too good to pass up. The Dow Jones Industrial Average is now trading over 35,000 and up about 30% from before the pandemic.

So everyone who could jumped into action.

Allbirds Inc., Rent the Runway Inc. and On Holding are all in the process of IPOs, while Zegna has struck a deal with a SPAC and Warby Parker Inc. has taken a slightly different route to the public market with a direct listing. The resale industry got a boost with offerings from ThredUp Inc. and Poshmark Inc., and the beauty maintained its momentum with the introduction of Olaplex Holdings Inc. and The Honest Co. Inc.

That was only part of the Wall Street race.

Also included are Mytheresa, Dr. Martens, Figs, Lulu’s Fashion Lounge Holdings, Kidpik Corp., Brilliant Earth Group Inc., Aka Brands Holding, Torrid Holdings and more.

Last on the scene is Zegna, which was up 4.2% to $ 10.74 on its first day of trading and continued to gain, closing at $ 11.87 on Tuesday.

The Italian menswear giant listed in New York after signing a commercial agreement with Investindustrial Acquisition Corp., or IIAC.

IIAC raised total gross proceeds of $ 402.5 million in its IPO. The Zegna family continues to control the luxury company with a share of almost 66 percent. Investindustrial has a share of around 13% and around 21% is free float.

The company’s first day of business came when New York is grappling with a surge in COVID-19 cases, but Zegna has never thought about postponing the listing.

The fashion was part of a broader push that saw a record 1,053 IPOs in the United States this year, a 123 percent increase from last year, which set the previous high tide record, according to Stocksanalysis.com.

But there is more to it than just a rush to sell in a hot market.

The public face of the industry has been significantly changed by the influx – combined with the wave of bankruptcies last year that removed long-standing companies like JC Penney Co. Inc. and Tailored Brands Inc., it’s a redone industry and with a new center of gravity.

The bulk of the freshman class of fashion very clearly comes from a new generation, looking to remake the old world with a more sustainable, more diversity-focused, and in many cases ready-to-face style and retail vision. challenges in new ways.

It’s an ambition most clearly stated by Jennifer Hyman, co-founder, president and CEO of Rent the Runway Inc., who presented investors with a radically different view of the fashion industry.

“The feeling of having a closet full of clothes but nothing to wear is omnipresent,” she said. “Driven by consumers’ desire for variety and novelty, cabinets have grown with the average American buying nearly double what we bought 30 years ago. But when we buy more, we wear less. Fifty-five percent of the wardrobe is rarely used, full of items that no longer fit and that we no longer wear. This is a financial and environmentally unsustainable waste.

Rent the Runway is a public actor now.
Courtesy

“Our solution is Closet in the Cloud, the world’s first and largest shared design closet that has transformed the way women dress by allowing them to wear whatever they want without having to own it,” said Hyman. “Our mission is to empower women to feel their best every day and encourage millions of customers to buy fewer clothes and use our shared closet instead.”

The average Rent the Runway subscriber gets the retail equivalent of $ 4,000 in looks each month, 20 times what they spend to use the service.

But Wall Street is still trying to accept this grand vision – and the more than $ 761 million in losses Rent the Runway has recorded since it was founded in 2009. The company’s stock has fallen to $ 8.86, less than half of the $ 21 that it grossed in its October IPO.

Allbirds is another company with its heart in its hand (and wool trainers on its feet), thinking big, but working to synchronize with investors. The company’s shares have fallen 3.5% since its IPO in early November.

Co-CEO Joseph Zwillinger said when he and co-CEO Timothy Brown founded the company in 2015: “We believed that climate change was our most formidable and existential crisis, and as a result, we believe consumers ultimately. they would link their purchasing decisions with their values ​​on the environment. However, most of the footwear and apparel industries continued to rely on synthetics. Within that tension, we saw opportunity. But we didn’t want to make sustainable products for the good of the planet. We wanted to make products that are incredible because they are sustainable. We put this purpose at the heart of our business and connect it to everything we do, but above all to our investments in research and development and to our model of distribution”.

Wall Street is ready for new ideas and to invest more than ever in sustainability-based businesses, but every company is its own case. Others were more warmly welcomed.

Warby Parker has grown 20.8 percent since its September IPO with a growth story that echoes past years’ approach and includes opening more brick-and-mortar stores. And hopes are high that On Running can take on the athletic sneaker giants and its stock has risen more than 56% since its September offering.

As many rumors challenge Wall Street investors to think differently – about sustainability or ownership or just the growth left in retail – the public market will challenge each of them in their own way.

And while many of the vibrant venture capital-backed names have strong founders who have control or near control over their company by virtue of the super voting of shares, Wall Street inevitably requires growth and profits.

It remains to be seen how this changes agents of change.

It’s also an open question as to how many of the newcomers to the market are really ready to go public or whether investors will continue to bet big on the consumer space as the pandemic resolves.

At least some are looking for the public-private revolving door to start shooting.

As a senior private equity executive told WWD, “I see these IPOs and I see the flow of my deal over two years.”

– With the contribution of Luisa Zargani

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