Year in Review: The IPO Rush Transforming Fashion
- Oops!Something went wrong.Please try again later.
In a world of change, there’s at least one constant: fashion still knows how to find a trend and run with it.
In 2021, it was the IPO.
More from WWD
Despite the pandemic, social distancing and the rest of it, government stimulus helped keep consumer spending and the stock market humming this year.
With Wall Street repeatedly setting new highs after a short, very steep lockdown recession, the getting was simply too good to pass up. The Dow Jones Industrial Average is now trading over 35,000 and up about 30 percent since before the pandemic.
So everybody who could was getting in on the action.
Allbirds Inc., Rent the Runway Inc. and On Holding all staged IPOs, while Zegna cut a deal with a SPAC and Warby Parker Inc. took a slightly different path to the public market with a direct listing. The resale sector got a boost with offerings from ThredUp Inc. and Poshmark Inc. and beauty kept up its momentum with the introductions of Olaplex Holdings Inc. and The Honest Co. Inc.
That was just part of the rush to Wall Street.
Also making their entrances were Mytheresa, Dr. Martens, Figs, Lulu’s Fashion Lounge Holdings, Kidpik Corp., Brilliant Earth Group Inc., A.k.a. Brands Holding, Torrid Holdings and more.
The latest on the scene is Zegna, which rose 4.2 percent to $10.74 on its first day of trading and has continued to gain, closing at $11.87 on Tuesday.
The Italian men’s wear giant listed in New York after entering into a business agreement with Investindustrial Acquisition Corp., or IIAC.
IIAC has raised total gross proceeds of $402.5 million in its IPO. The Zegna family continues to control the luxury company with a stake of nearly 66 percent. Investindustrial has a stake of around 13 percent stake and approximately 21 percent is free floating.
The company’s first day of trading came as New York grappled with a surge in COVID-19 cases, but Zegna never considered postponing the listing.
Fashion was part of a larger push that saw a record 1,053 IPOs in the U.S. this year, a 123 percent increase from last year, which had set the prior high-water mark, according to Stocksanalysis.com.
But there’s more going on than a simple rush to sell into a hot market.
The public face of the industry has been changed significantly by the influx — combined with the wave of bankruptcies last year that removed long standing companies like J.C. Penney Co. Inc. and Tailored Brands Inc., it’s a sector remade and with a new center of gravity.
Most of fashion’s freshman class is very clearly from a new generation, looking to remake the old world with a vision of style and retail that is more sustainable, more focused on diversity and, in many cases, ready to take on challenges in new ways.
It’s an ambition stated most clearly by Jennifer Hyman, cofounder, chairman and chief executive officer of Rent the Runway Inc., who laid out a radically different vision of the fashion industry to investors.
“The feeling of having a closet filled with clothes, but nothing to wear is ubiquitous,” she said. “Driven by the consumer desire for variety and newness, closets have been growing with the average American buying nearly double what we bought 30 years ago. But as we buy more, we wear less. Fifty-five percent of the closet is rarely used, filled with items that no longer fit and that we no longer wear. This is financially wasteful and environmentally unsustainable.
Courtesy
“Our solution is the Closet in the Cloud, the world’s first and largest shared designer closet that has transformed the way that women get dressed by letting them wear whatever they want without having to own it,” Hyman said. “Our mission is to empower women to feel their best every day and to 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 she spends to use the service.
But Wall Street is still trying to take in that big vision — and the more than $761 million in losses Rent the Runway has logged since it was founded in 2009. The company’s stock has fallen to $8.86, less than half the $21 it nabbed in its October IPO.
Allbirds is another company wearing its heart on its sleeve (and wool sneakers on its feet), thinking big, but working to syncing up with investors. The company’s stock is down 3.5 percent since its early November IPO.
Co-CEO Joseph Zwillinger said when he and co-CEO Timothy Brown founded the business in 2015: “We held the view that climate change was our most formidable and existential crisis and as a result, believe that consumers would eventually connect their purchase decisions with their values on the environment. Yet most in 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 sake of being good for the planet. We wanted to make incredible products because they are sustainable. We put this purpose at the heart of our business and link it to everything we do, but most notably, our R&D investments and our distribution model.”
Wall Street is ready for new ideas and investing more than ever in sustainability based businesses, but each company is its own case. Others have been greeted more warmly.
Warby Parker is up 20.8 percent since its September IPO with a growth story that echoes the approach of years past and includes rolling out more brick-and-mortar stores. And hopes are running high that On Running can take on the athletic sneaker giants and its shares are up more than 56 percent since its September offering.
As many of the voices challenge investors on Wall Street to think differently — about sustainability or ownership or just the growth left in retail — the public market will be challenging each of them in their own way.
And while many of the buzzy venture capital-backed names have strong founders who have control or near control over their company by virtue of super-voting shares, Wall Street inevitably demands growth and profits.
How that changes the change agents remains to be seen.
It’s also an open question as to just how many of the newcomers to the market are really ready to be public or if investors will continue to bet big on the consumer space as the pandemic settles out.
At least some are looking for the public-private revolving door to start spinning.
As one top private equity executive told WWD, “I see these IPOs and I see my deal flow in two years.”
— With contributions from Luisa Zargani
MORE FROM WWD:
In Fashion: What Inflation? Apparel Prices During the Pandemic
Specialty Stores Gain With November Retail Sales
Nike Buys Metaverse-ready RTFKT
Sign up for WWD's Newsletter. For the latest news, follow us on Twitter, Facebook, and Instagram.
